There is a lot of concern lately over the fact that the Social Security Administration (SSA) has been drawing down its trust fund, and how much that will affect future Social Security benefits payments. This trust fund is the amount of money the SSA has to pay for programs such as Social Security Supplemental income (SSI), Social Security Disability Income (SSDI), etc.
Social Security benefits are paid primarily through annual taxes. However, in short, benefits currently being paid out appear to exceed the tax revenues allocated for this important federal program. When the trust fund is exhausted, tax revenue will allow Social Security to continue to pay 3/4 of the benefits, even after the year 2034. This is true even if Congress does nothing to fix this problem.
Potential solutions include:
- • Increasing taxes on higher income workers
- • Increasing taxes on everyone
- • Changing eligibility for benefits, such as raising the full retirement age or using a means test
- • Some mixture of solutions
So while many sensationalist news stories seem to be sounding an alarm, it is probably too early to panic about whether Social Security will be around when you retire. The trustees report is designed to give Congress fair warning about potential fiscal problems, so that lawmakers have time to address these problems before we have any actual shortages.
Lawyer Doug Landau notes that there are many workers in the national economy who pay into the Social Security system who could never draw our benefits. He has seen this firsthand with workers in the landscaping, agriculture, hotel, fast food, and construction industries. These workers may be “ineligible for federal benefits” (as stamped on their work papers). They come to this country and often do such deadly work as asbestos remediation (at even increased risk during Covid), but still they are eligible only for limited benefits. Furthermore, undocumented workers very often pay into the system, but can never withdraw retirement, disability, or other Social Security money. This accounts for several billions of dollars a year, that may very well fund our children’s future retirement payments.
It is also important to note that the Covid epidemic has impacted the trust fund too, as many people were not working during this time. When the pandemic abates, and more people are back in the workforce, the coffers of Social Security should see more money flowing into them. This is important because Social Security tends to be the foundation of most Americans’ retirement plans.
Changes for 2022 in Social Security, based upon the Consumer Price Index (CPI) indicate that the “substantial gainful activity” criteria (SGA) will go from $1,310/month to $1,350/month for a non-blind applicant. Social Security describes work for pay as substantial gainful activity. For the Social Security Administration, if you can perform SGA, then you are not disabled and cannot receive SSDI benefits. For the “trial work” program, the amount of earnings that may be allowable will go from $940/month to $970/month.
The average monthly Social Security benefits payable in January 2022 to all retired workers is $1,565/month, before the payment of a 5.9% Cost of Living Adjustment (“COLA”), . After applying the COLA, the payment will be $1,657/month. A disabled worker, spouse and at least one child would see an average of $2,250 per month, and after the 5.9% COLA bump up, $2,483. The average numbers for all disabled workers would be $1,282/month, and after the inflation money, $1,358/month.
For more on the new numbers for Social Security benefits, view the 2022 COLA Fact Sheet here.
If you, or someone you know, has been involved in an accident that was not their fault, or injured at work, and they are no longer able to work, please give us a call (703-796-9555) or email us at Abrams Landau, Ltd.