Friday, July 31, 2009

Rising disability claims, unemployment could mean another hit to Social Security’s financing

The AP reports that Social Security Administration is being hit by a wave of claims for disability insurance benefit, up by 10 percent versus their projections from earlier this year. In addition to the administrative burden to the agency, which implies long waits for people appealing a rejected claim, higher numbers of DI beneficiaries will put more pressure on the program's financing, which already declined significantly in the most recent Trustees Report.

Moreover, unemployment has risen to levels far above those projected for 2009 even under the Trustees "high cost" estimates for this year, at around 9.7 percent versus a high cost estimate of 8.5 percent. This, too, will make for a hit to Social Security's short-term finances.

As a result, I wouldn't be surprised if next year's Trustees Report contained more bad news for the program, even if the economy starts to recover.

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