national academy of social insurance; question/answer on Social security future

Quick Answers to Common Questions about Social Security to accompany Social Security Finances: Findings of the 2012 Trustees Report Social Security Brief #39, April 2012

1. Social Security is going to spend more money this year on benefits than it will collect in payroll taxes. Does that mean it’s going broke?

No. Unlike in the early 1980s, and despite the recent deep recession and slow recovery, Social Security is continuing to build reserves through interest earned on the money in its trust funds. The reserves are projected to increase from $2.7 trillion at the end of 2011 to $3.1 trillion at the end of 2020. As in previous economic downturns, with large numbers of people out of work and many drawing Social Security retirement benefits earlier than they had planned, contributions from earnings grew less than antici- pated while benefit payments increased more than anticipated. The program has responded in a counter- cyclical way – helping to stabilize the economy during severe downturns – just as it was designed to do.

2. But I keep hearing about Social Security’s “cash-flow imbalance.” Does that mean it’s running out of cash?

No. The term “cash flow” as used in the unified federal budget refers to the program’s annual income and out- go without counting interest earned by the trust fund reserves. If interest is ignored, income was less than outgo in 2011. But interest is a very real part of Social Security’s income. Interest income is a firm obligation of the Treasury to pay the interest due to the trust funds. It is just as firm as the nation’s commitment to any oth- er holder of U.S. Treasury bonds. With interest income included, Social Security had a $69 billion surplus in 2011, and projected income including interest will continue to exceed outgo through 2020.

3. Isn’t all the money in the trust funds just worthless IOUs?

No, the $2.7 trillion in reserves held by the trust funds is invested in special U.S. Treasury bonds. In financial markets, Treasury bonds are considered an ex- tremely safe investment because they are backed by the full faith and credit of the United States.

4. Wasn’t the money in the trust funds used to pay for other things, like tax cuts and wars?

The Treasury bonds held by Social Security’s trust funds represent a loan to the rest of the government, and the money must be paid back when it is needed to pay Social Security benefits. The current federal budget deficit is the result of an imbalance in general revenues, not in Social Security funds.

5. Everyone knows the U.S. has a deficit problem. Why shouldn’t Social Security be on the table?

Social Security did not cause the deficit and has not contributed to it. Since 1935, the program has collected $15.5 trillion and paid out $12.8 trillion, leaving a balance of $2.7 trillion in the trust funds at the end of 2011.

6. Will the retirement of the baby boomers bankrupt Social Security?

No. The boomers’ retirement did not catch Social Security by surprise. Changes that were enacted nearly 30 years ago and that are still phasing in, including gradually raising the age of eligibility for full benefits from 65 to 67, have slowed the growth of future benefits, and the boomers’ contributions throughout their working years have helped cover the cost of their retirement. Social Security faces a long-term revenue shortfall, projected by the trustees to be 2.67% of all payrolls in employment covered by Social Security over the next 75 years. A moderate and manageable short- fall is not a crisis.

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7. We’re all living longer, so why not raise the retirement age again? Wouldn’t that eliminate the shortfall?                                                                                       Gradually raising the full-benefits retirement age to 70 could save about a third of the money needed to balance Social Security income and outgo over the long term.1 But there are many concerns. First, not all Americans are living longer: it’s mostly higher-income people who are enjoying greater longevity. Lower-income workers, those in physically demanding jobs, and some minority populations have shorter life expectancies. Second, it’s not clear that jobs will be available for millions more workers in their late 60s, even if they are in good health, nor is it clear how keeping them on the job would affect employment opportunities for younger workers. Third, raising the full retirement age lowers benefits at any age benefits are taken.

8. Some people claim Social Security is headed for bankruptcy. Will younger workers ever see a benefit?

Yes. Social Security has never missed a payment in 76 years. It is fully financed for the next 21 years, and in the highly unlikely event that Congress takes no action before 2033 to maintain the program in balance, it could still pay about 75% of scheduled benefits thereafter. Social Security will never become bankrupt as long as workers and employers continue to contribute to the program through deductions from earnings.

9. I worry that lawmakers will change Social Security, so I’m going to start taking benefits as soon as I can, at age 62. Is this a good strategy?

You should think long and hard before you do that. Monthly benefits are up to 8% higher for every year you wait, up to age 70. If you are able to wait until you’re 70 to take benefits, they will then be at least 76% higher than if you had started at 62. That’s a huge difference, especially when you think about the importance of Social Security benefits as you grow older: unlike savings and other resources, Social Security benefits continue as long as you live and are not eroded by inflation.

10. Why should rich people get Social Security benefits? Why not limit it to people who really need it?

First, one of Social Security’s great strengths is that it is not based on a means test: you don’t have to prove you have low income and few assets to qualify for benefits. Means testing discourages savings, because the more you save, the less you get. Second, Social Security is insurance, not welfare. You buy coverage and pay premiums with deductions from earnings. When an insured event occurs – disability, retirement, or death of a worker – the program pays benefits to the insured person or his or her survivors. Third, denying benefits to the rich would have minimal impact on Social Security’s finances – because only about 2% of Social Security benefits go to individuals with non-Social Security incomes over $100,000 and because nobody, no matter how rich, gets more than the maximum monthly benefit, currently $2,513 for a worker retiring at age 662 – but denying benefits to anyone who has earned them would be unfair and make the program more like welfare. Finally, the benefits paid to high-income people are subject to taxation as income, and the revenue comes back to Social Security.

11. Suppose I think I can do better by keeping my payroll taxes and investing them myself. What’s wrong with that?

First, if you fail, others – your family and/or taxpayers – will have to support you. Second, you would need to save a lot of money to buy an annuity (a private insurance policy paying guaranteed monthly benefits) worth as much as a typical Social Security benefit. For example, to buy an annuity at age 65 that would match the average Social Security retirement benefit ($1,230 in January 2012), plus keep up with inflation and continue to pay your widowed spouse, you would need to pay about $430,000 up front in a lump sum. Thirdly, in addition, if you had young children, you would need to buy over $450,000 in life insurance and nearly $330,000 in disability insurance at age 30 to match Social Security’s family protections. Fourth, few people are able to amass such savings. And Social Security is insurance; savings can’t pool risks as insurance does. Finally, Social Security is secure: it has never missed a payment and can ride out market downturns and recessions.

1 Reno, Virginia and Joni Lavery. 2009. Fixing Social Security: Adequate Benefits, Adequate Financing. Washington, DC: National  Academy of Social Insurance.  2Social Security Administration. 2012. “Maximum Social Security retirement benefit.” Retrieved April 16, 2012, from http://ssacusthelp.ssa.gov/app/answers/detail/a_id/5/~/maximum-social-security-retirement-benefit . 3Thrift Savings Plan, 2012. “Annuity Calculator.” Retrieved April 10, 2012 from https://www.tsp.gov/planningtools/annuities/annuityCalc_select.shtml , using interest rate index of 2.125%. 4Nichols, Orlo R. 2008. “The Insurance Value of Potential Survivor and Disability Benefits for an Illustrative Worker.” Baltimore, MD: Social Security Administration, Office of the Chief Actuary

No Fault Auto Insurance; Holiday Drivng

  Thanksgiving begins a time of year when we all drive a little more often than usual and at times when we might be hurried. Taking I-75 to get from one end of town to another driving at higher speeds can make accidents especially dangerous. Collisions at these speeds can ruin holidays, sometimes causing wrongful deaths. Even with the University of Florida students away from Gainesville over the holidays driving conditions are hazardous. Driver distractions add to the likelihood of accidents. Don’t text while driving, pull over to talk on your cell phone, wear your seat belts. These measures dramatically improve your changes of a safer holiday. It you are in an auto accident remember the Florida No Fault law recently has significant changes.
    Florida No Fault also known as personal injury protection (PIP) law was adopted in 1972 in an effort to reduce litigation and to make sure anyone injured in an auto accident would quickly get money to treat their injuries. The legislation required that everyone who owned a car carry PIP insurance. If an accident occurred the driver’s insurance company would pay up to $10,000 to cover his or her own medical bills and lost wages after the accident, no matter who is at fault.
   The recent changes to the PIP law requires an accident victim to obtain treatment within 14 days in an ambulance or hospital, or from a physician, osteopathic physician, chiropractic physician, or dentist. The full $10,000 PIP medical benefit is available only if a physician, osteopathic physician, dentist, or a supervised physician’s assistant or advanced registered nurse practitioner determines that the insured has an “emergency medical condition.” Otherwise, the PIP medical benefit is limited to $2,500.
  Follow-up services and care requires a referral from a physician, osteopath, chiropractor or dentist. Massage therapists and acupuncture was eliminated from eligibility for PIP benefits. Call or visit should have questions.

Disability applications; causes of disability

When applying for social security disability be sure to include every illness or condition that contributes in any way to your difficulty for working.

Depression, Bi-polar disorder, PTSD (post traumatic stress disorder), schizophrenia, and other psychiatric illnesses are often the basis for disability. When these conditions are combined with chronic pain, fibromyalgia, degenerative disk disease, POTS (Postural orthostatic tachycardia syndrome), sciatica, congestive heart failure, COPD (chronic  obstructive pulmary disease), caprel tunnel syndrome or any other condition your disability is all the more aggravated.

Don’t be discouraged by a denial of your application. Come see us, call, or email us to find out how to appeal. If you cannot come to Gainesville arrangemments can sometime be made to come visit you.

We are now included in the Nolo.com directory if you visit their website.

most common mistakes applying for social security

In todays work environment employees at social security offices are increasingly asked to do more and more work without increase pay or improved working conditions. Failing to realize these working conditions can make processing your application harder than it already is. The applicant who wants to give his or her claim the best chance needs to make it as easy as possible. Surprisingly getting medical records from your doctors offices into the social security files is not alway done. You can help your claim by getting as many of your records as possible, organize them by the doctor, and take them to the social security office. The second thing you can do is more difficult, but even more helpful. Ask as many of your doctors as you can get to describe the activity restrictions you should follow. Most of the time these physical restrictions are not a routine part of a doctors records, but these restrictions are critical to the social security administrations evaluation of your claim. You can get forms off the social security administration’s website which make it much easier for a doctor to document your restrictions. Check our links.

Claimant’s representatives vs. claimant’s attorneys

Some who appeal the social security administrations denial of their application for disability insurance benefits (SSDI) or supplemental security income benefits (SSI) do not always understand who they have hired to represent them. A representative at the Hearing level conducted in front of an Administrative Law Judge need not be a licensed lawyer. Non-lawyer representatives are permitted to represent claimants. I sometimes get calls from claimants unhappy with their representation and telling me they are only now learning that their representative is not a lawyer. Some of these non-lawyer representatives advertise their services on television and or the internet. Many of these non-lawyer representatives are very good advocates, knowledgable in the laws and rules regulating these proceedings. Some are less responsible and or knowledgeable. I am not writing to criticize these representatives as a group. Just as with lawyers, some or responsible knowledgeable advocates, some are not. My post here is meant to encourage every consumer to ask questions before hiring someone to represent them, stay in touch with that representative to see how the case is developing and know patience is required because of the numbers of cases filed and the limited staffing at the Hearings offices. Come see us in Gainesville if you have questions about your eligibility for disability benefits.

Disability denials up.

The internet allows lawyers from all across the country that represent claimants to compare notes on how cases are being decided. Every last one shares the opinion that it has never been harder to get a favorable ruling. If you apply for social security disability insurance or supplemental security income and are denied push back, appeal when appropriate. Do not roll over. Bring you facts to a lawyer to discuss the appeal process, get a realistic evaluation of the proof required to obtain disability benefits. Learn about vocational rehabilitation options if your facts just don’t support the award.

Credibility critical to Disability determinations

When discussing appealing the denial of a social security disability application I will have a 90 minute to two hour conversation with clients in my Gainesville office. One important topic we discuss is credibility before the Administrative Law Judge. Often cases are decided by whether the judge believes the claimant’s symptoms are as serious as they testify at the hearing. There are a number of suggestions which we discuss that can reassure the judge that you are fairly reporting your conditions. If you have been denied and need a lawyer’s help appealing give us a call.

Workers comp claims into Personal injuries into Social security claims

On occasion injuries from a work related accident can result in personal injury claims against a negligent person who is not a co-worker (co-workers generally receive immunity from these claims as does the employer) or against the manufacturer of a product that caused an injury. For instance you might be hit in a car accident while at work. Both workers compensation and automobile insurance can be responsible to compensate you. If these injuries leave you unable to work for a year or more you then may be entitled to social security disability benefits. Workers compensation leins and Medicare leins can make these cases a  mine field of traps which insurance adjusters know little about, and candidly are not paid to protect you from. Take advantage of free consultations. No question is stupid. Knowledge is a powerful thing.

Social Security Disability Law

When I sit down with new clients in Gainesville or anywhere to discuss appeals of the denial of their SSDI or SSI applications one misunderstanding that recurs is believing that proof of being unable to perform past work will entitle an applicant to disability benefits. While this proof is necessary, an applicant must also prove that he or she cannot do any other work that is available in the NATION. A helpful website to visit is WWW.SSA.gov where you can find a link to “disability.” If this isn’t helpful call us, 352 371-9909.

Lawyer Referral Services; Words of Caution

This year I have represented three individuals who had been represented in personal injuries cases, or social security disability cases by lawyers they learned of and were referred to from the television.  These clients were unhappy with the services for several reasons. One reason common to all three was that the client never got to meet or talk with the lawyer to whom they were referred. Another reason was the lawyer was eager for a quick settlement (quick can be read to mean easy, low dollar). The insurance company knows this, and will exploit it. They know it as soon as they learn the lawyer is located in a town many miles away from where the claimant lives and or where the accident occurred. The last reason for concern over lawyer referral representation is not quiet so obvious. Often times clients will need advise about how and where good quality health care can be gotten in their community. Lawyers from outside the community won’t know the local health care community. In place of local quality health care these clients were referred to health care providers on the referral list which the lawyer came from. These health care providers are not permanent members of the community, but rather set up shops just to take these referrals. They often push excessive treatments in order to bill PIP insurance or health insurance. In some instances the lawyer and the doctor on the referral service are more concerned with each other’s getting paid than they are with the clients well being. I believe you are better served represented by a lawyer with whom you can sit down and tell him or her face to face about your problems.