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Published On: Tue, Sep 15th, 2015

What Will the Cuts in Disability Benefits Mean?

The future of Social Security and Medicare does not look very positive at the moment, and the Social Security disability insurance program is looking particularly gloomy when it comes to the future. According to a report released last month by the Social Security trustees, 2016 will see the funding for the disability insurance program run out, an issue that is in need of immediate attention. If nothing is done about this, millions of Americans will be hit with an automatic reduction of 19% in their Social Security disability benefits during the final quarter of 2016. Although currently the average recipient receives around $1,165 per month in Social Security disability benefit, the maximum amount beneficiaries can claim is $2,663.

Photo by Stuart Miles at freedigitalphotos.net

Why the Cuts?

According to a report by the Center for Retirement Research at Boston College, Social Security is precluded from spending any money that it does not have, and benefits should be in accord with disability insurance payroll tax revenues.

Kurt Czarnowski of Czarnowski Consulting in Norfolk, Mass, says that the reality of the situation is that almost 11 million people in America rely heavily on Social Security disability benefits, with around 9 million of these people being disabled workers and 1.7 million disabled children. Many people claim disability benefits to cover necessary costs because of their disability, for example installing an elevator at home. Most experts don’t expect the lawmakers in Washington to cut disability benefits but instead they expect an alternative will be found.

photo 401(K) 2012 via Flickr

photo 401(K) 2012 via Flickr

What Should I Do to Prepare?

If you are currently in receipt of Social Security disability benefits and are worried about the potential cuts, it’s important that you don’t panic just yet. Instead, you should prepare yourself should the worst happen so that you don’t find yourself in a predicament if your benefits are cut. Design a budget that accounts for a 19% reduction in your disability benefit and stick to it so that if the cuts are made you won’t lose out.

If you are physically able to work, it is a good idea to seek employment now if you are currently unemployed. Social Security Administrations will allow for a trial period which will allow you to test your ability to work whilst earning income and you won’t need to give up your disability benefits. Once your trial period is up, if you decide to work you are able to continue working for 36 months whilst still being entitled to claim disability benefits providing they are not seen as substantial.

Write to Senators and Representatives

If you want to get your voice heard on this issue, it is a good idea to write to local representatives and senators in order to voice your disapproval and concerns about how Congress is managing the country’s affairs. As it is a legislative problem, Congress are required to address it.

Will you be affected if the Social Security disability benefits cuts are put in place in late 2016? How will they affect you, and which steps have you taken to prepare? We’d love to hear from you in the comments.

Guest Author: Carol Trehearn

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Displaying 1 Comments
Have Your Say
  1. Philip Stone says:

    Just a quick question. I also get SSI to bring my income up to 75% of the poverty level. Will SSI stay the same or increase to get me back up to the SSI amount?

    I have not seen this addresed anywhere and there are a lot of people like me this way. Does anybody know?

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