The federal social security retirement and social security disability programs are beneficial to millions of retired and disabled Americans as a source of regular income. Medical records review plays an important role in determining eligibility for the disability program. It is estimated that at present more than three out of five seniors are dependent on their monthly social security check for at least half of their income. Future retiree dependence on Social Security may be slightly lower according to a Gallup survey, but it will still be substantial.
Can your social security benefits be reduced in the years to come? It could. Let us see how.
- Cumulative benefits paid may be reduced for future retirees: In 1983, the Reagan administration passed an Amendment that introduced a new way to generate income as well as a long-term strategy to reduce Social Security costs. A gradual increase to the full retirement age was proposed. At full retirement age, a beneficiary is eligible to receive 100% of his/her full retired worker benefit. A person claiming benefits before reaching full retirement age is accepting a permanent reduction in their monthly payout. Those waiting until after their full retirement age can further increase their monthly income. When passed in 1983, the Amendment planned a 2-year increase in the full retirement age from 65 to 67 over a span of four decades. Now, the full retirement age is increasing by 2 months per year and in 2022 it will cap out at age 67. Future retirees have to either choose to wait longer to receive their full benefit thereby reducing the number of years they are collecting benefits; or accept a considerable reduction in their payout if they claim early and thereby reduce their cumulative payout in the long run. In either case, aggregate benefits paid are reduced for future retirees.
- The Social Security Board of Trustees annual report in 2017 found that the program will be facing a major funding gap over the next 75 years. The SSA (Social Security Administration) is expected to begin paying out more in benefits than it is generating in revenue by the year 2022. In 2034, the estimated $3 trillion in asset reserves held by the program at its peak in 2022 will be completely exhausted. If this excess cash is exhausted, Social Security will have no interest income to be earned through certificates of indebtedness or special-issue bonds. It is pointed out that the current payout schedule could be unsustainable. The report estimates that there could be an across-the-board cut in benefits of up to 23% just to keep the program solvent through 2091. This will automatically result in a reduction of benefits for current as well as future retirees.
- Social Security benefits are taxable. As of 2016, 56% of senior households are being taxed to some degree on their social security benefits. This is because the income thresholds introduced in 1983 and 1993 have never been adjusted for inflation. With each passing year, an increasing number of seniors are likely to be taxed on their benefits.
- A major concern for present and future retirees is the steady decline in the purchasing power of social security dollars. The purchasing power has declined by 30% since the year 2000, according to an analysis by the Senior Citizens League. Social Security’s annual COLA (Cost of Living Adjustment) is not keeping abreast with the inflation that seniors are actually facing. COLA takes into account the spending habits of working-age Americans, not seniors, which is a major drawback. Therefore, it tends to give more importance to expenditures for transportation, education, apparel and food and plays down the higher cost that seniors face for housing and healthcare. It is estimated that medical care inflation has surpassed Social Security’s COLA in 34 of the past 36 years.
As a company providing medical chart reviews for social security disability lawyers, we know how vital social security income is to retired and disabled Americans. There is no doubt that any concerned American would be eagerly awaiting the government to implement proactive measures that will help save the Social Security program and protect the valuable income of millions of Americans.
