The Journal of The DuPage County Bar Association

Back Issues > Vol. 30 (2017-18)

Dispelling the Myths Surrounding Social Security
By Jon Walker

Perhaps no federal program is more misunderstood than Social Security. The system is subject to pervasive criticism, and myths such as: “Social Security will be broke by the time I retire,” “Social Security is a Ponzi scheme,” “illegals are stealing from Social Security” and “anyone can work the system and get disability benefits.” On July 13, 2017, Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Fund released their 2017 annual report, which shed considerable light on the health of the Social Security Trust Fund and the viability of the system. This article will summarize the Social Security system, analyze the findings of the recent trustee’s annual report, and hopefully dispel many of the myths surrounding Social Security benefits and beneficiaries.

What is Social Security? What is commonly referred to as Social Security is actually four federal insurance programs administered by the Social Security Administration. These include: (a) Retirement Insurance Benefits (RIB), (b) Survivor’s Benefits, (c) Social Security Disability Insurance (SSDI) and (d) Supplemental Security Income (SSI).

Retirement Insurance Benefits. These are payments made to retired workers 62 years of age or older. They are funded by payroll Federal Insurance Contribution Act (FICA) taxes and Self Employed Contribution Act (SECA) taxes. These taxes are collected by the IRS and placed in the Federal Old-Age and Survivor’s Insurance Trust Fund. Individuals can take early retirement at age 62 or full retirement at ages ranging from 65-67, depending on date of birth. Individuals taking early retirement will receive benefits reduced by 25.8% of full retirement benefits. The average retirement benefit as of May 2017 was $1,367.58 monthly or $16,410.96 annually.1 As of May 2017, 44.855 million retired workers and their dependents are receiving Retirement Insurance Benefits.2 To be eligible for Social Security Retirement Insurance Benefits, an individual must have worked for 10 years or earned 40 credits. In 2017, one credit is earned for every $1,300 in earnings, up to the maximum of 4 credits per year.3

Survivor’s Benefits. These are benefits paid to the widow or child of a deceased worker. To qualify for benefits, a widow must be 60 years of age or have a child under the age of 16 or a disabled child in his or her care; or must be disabled and be at least 50 years of age. Children qualify for benefits if they are under the age of 18, an adult but disabled before the age of 22, or a high school student under the age of 19. Survivor’s Benefits are collected and placed in the same trust fund as Retirement Insurance Benefits. As of May 2017, 6 million individuals were receiving Survivor’s Benefits.4

Social Security Disability Insurance Benefits. These are payments made to disabled workers, either on a temporary or permanent basis. To qualify for these benefits, the worker must establish that they have a (1) mental or physical condition that; (2) prevents them from engaging in substantial gainful activity; (3) and that condition is expected to last at least 12 months or result in death. To establish disability, the worker must prove their disability and inability to work with both medical and vocational evidence.

Social Security Disability Insurance is unique in that the burden of proof to establish disability is placed on the worker.
This is achieved through administrative appeals and hearings, often with the help of an attorney. The process is long; the Oak Brook Office of Disability Adjudication and Review (ODAR) has workers waiting on average 17 months just for a hearing before an Administrative Law Judge (ALJ).5 In 2016 there were over 2.3 million applications for disability benefits, with over $744,268 granted benefits.6 In 2016, over 840,044.00 individuals had their disability benefits terminated.7 Like Retirement Insurance Benefits, Social Security Disability Benefits are funded by payroll taxes, which are then placed in the Disability Insurance trust fund. In 2016, the average monthly benefit rate was $1,171.8 As of May 2017, 10.564 million disabled workers and their dependents were receiving Social Security Disability Insurance benefits.9 SSDI benefits convert to Retirement Insurance Benefits once the recipient reaches retirement age.

Supplement Security Income. These are benefits paid to disabled adults and children who have limited income and assets, and provides cash to meet basic needs for food, clothing and shelter. To be eligible, an individual must be 65 or older, blind or disabled, and have resources of less than $2,000 for an individual or $3,000 for a couple. Resources are defined as cash, savings, stocks, bonds, real estate, personal property and any other good or asset that could be converted to cash, food or shelter. In short, SSI provides basic sustenance to the very poor. Unlike Retirement Insurance Benefits and Social Security Disability Insurance, SSI benefits are funded through general funds in the U.S. Treasury, primarily personal income and corporate taxes. As of May 2017, 5.525 million Americans are receiving SSI benefits.10 Maximum monthly SSI benefits are $735 for an individual or $1,103 for a couple. SSI benefits are reduced by one-third if the recipient lives in a household and does not pay for food and shelter, such as a parent or benevolent family member. The medical standard for establishing disability for SSI is the same as for SSDI for individuals 18 years or older. The Social Security Administration administers both programs using substantially the same administrative appeals and hearing process.

The Social Security Trust Fund. Contrary to what is prognosticated by talking heads on cable news, the Social Security trust fund is not going broke. First, it is important to note that there are actually two trust funds: the Federal Old-Age and Survivor’s Insurance Trust fund (which accounts for Retirement Insurance and Survivor’s Benefits) and the Disability Insurance fund (which accounts for Social Security Disability benefits), which are separate entities by law. The Federal Old-Age and Survivor’s Insurance Trust has $2.8 trillion in reserves; the Disability Insurance fund has $46.3 billion in reserves.11 In 2016, the Old-Age and Survivor’s Insurance fund took in income of $797.5 billion, while paying out $776.4 billion in benefits and administrative expenses; the Disability Insurance fund took income of $160 billion; while paying out $145.9 billion in benefits and administrative expenses. 12 It should be noted that of the combined expenditures of $922.3 billion for both funds, administrative expenses were a mere 0.7%.13

Payroll taxes (FICA and SECA) accounted for 87% of the total trust funds’ income. Payroll tax contributions consist of taxes paid by employees, employers and the self-employed, taxed up to income of $127,200.14 3% of the trust funds’ income derives from taxing Social Security benefits and more than 9% of the reserves come from interest earned on invested trust fund assets; the Department of Treasury invests trust funds’ reserves in interest bearing securities issued by the government.15 In 2016, the trust funds’ reserves earned interest at an effective annual rate of 3.2% or $88.4 billion.16

In every year since 1982 more FICA and SECA taxes were deposited in the combined trust funds than paid in Retirement, Survivor’s and Disability benefits.17 The myth that the Social Security is going bankrupt stems from the increased payouts and reduced tax revenues anticipated in the coming years. The 2017 trustee’s report affirmed prior projections that Old-Age and Survivor’s Trust fund reserves will be depleted by 2035.18 The Disability Insurance trust fund will be depleted of assets by 2028 (it was previously projected that the Disability Insurance Trust fund would be depleted by 2023).19 However, this does not mean that benefits will no longer be paid. Rather, benefits paid from the Old Age and Survivor’s Trust would still be paid at a rate of 75 percent of benefits previously owed.20 Benefits from the Disability Insurance Fund would be paid at 93 percent of scheduled benefits.21 The trustees also concluded even after the trust funds are depleted of assets, in 75 years or by the year 2091, the combined trust funds will be paying 73 percent of scheduled benefits.22 Given that the average benefit rate for full retirement is $1,367.58 monthly, under the projected shortfall benefits would be reduced to $1,025.68 monthly by 2035 and $998.33 monthly by 2091.23

The depletion of the trusts funds and reliance on incoming benefits through taxation, or “pay as you go”, gives rise to the myth that Social Security is a Ponzi scheme. However, unlike a Ponzi scheme, which is based on fraud, Social Security is based on funding in the form of payroll taxation. Surplus assets are invested in U.S. Treasuries, which are widely considered the world’s safest investment and which accrue interest for the trust fund. When the assets are depleted, benefits will be from ongoing income, which is not projected to disappear.

Impact of Unauthorized Immigration. It is illegal for unauthorized immigrants to receive Social Security benefits. While there are certainly instances of unauthorized immigrants receiving Social Security benefits through use of stolen Social Security numbers, the government has concluded it is relatively rare.24 Rather than draining Social Security, it turns out unauthorized immigrants are actually a boon for Social Security. The Office of the Chief Actuary (OCACT) concluded in 2013 that Social Security collects an estimated $13 billion in payroll taxes from unauthorized immigrant workers and their employers.25 These $13 billion in additional Social Security taxes represent a net cash flow to the system that will not be paid out in benefits to the unauthorized immigrants.26

SSDI Approval Rates. There is a popular misconception that Social Security Disability benefits are easily obtained and the standard for obtaining benefits is lax, with fraud and deceit rampant. Nothing could be further from the truth. As any lawyer representing clients in claims for disability will tell you, it is a long, hard struggle for justice. This sentiment is reflected by statistics from the SSA. Between 2005 and 2014, only 35% of claims filed were awarded benefits.27 In every year since 2010, the number of individuals granted disability benefits have decreased.28 Approval rates have also fallen, from 44.61% (1,682,454 applications/750,464 awarded benefits) in 2002 to 32.06 percent of applications (2,321,583 application/744,268 awarded benefits) in 2016.29

SSDI claims are usually adjudicated in three stages: (1) initial application for benefits; (2) request for reconsideration (first appeal); (3) hearing before administrative law judge (second appeal). Typical wait time for adjudication for an initial application range from 30-90 days, with 77 percent of applications denied. Reconsideration wait times are similar, though 94 percent of applications are denied. Disabled workers are then expected to wait over 500 days from appealing the denial of the request for reconsideration until their hearing date. Once at the hearing, approval rates remain low. For example, between October 1 of 2016 and June 30 of 2017, the 8 administrative law judges in the Peoria Office of Disability Adjudication and Review heard 1, 907 hearings.30 They issued 604 Fully Favorable Decisions for benefits or less than 32 percent; 145 Partial Favorable Decisions, for a total approval rate of 39 percent.31 In other words, of the 1907 individuals who had waited over 600 days since their initial application for benefits, only 749 were approved Social Security Disability Insurance benefits.32

Recent changes in the rules governing disability cases are also making claims more difficult to prove. Effective March 27, 2017, the “treating-physician-rule” was abandoned, which previously required administrative law judges to give significant weight to the opinions and evidence from the claimant’s treating doctor.33 This new rule allows ALJ’s to give the same weight to the opinions of medical doctors hired by the SSA, who have never treated or even examined the claimant, to doctors who have treated the disabled worker for years and are intimately familiar with their condition and limitations. It was previously accepted that a claimant’s treating doctor was in the best position to understand their impairments and limitations. This is no more, and doctors, often who have no specialization, background, training or expertise in the claimant’s medical condition, and are hired for a few hundred dollars to quickly offer opinions in SSA cases, now carry the same weight.

Will Social Security Be Around For Me? Despite the popular narrative, the Social Security system is in relatively good shape. Unsubstantiated claims about the safety net work well to stoke fear and resentment, but are not supported by facts. Social Security is an easy target and disability recipients in particular are convenient scapegoats, perceived as dependent on the government and “takers.” Most Americans would be surprised to learn that a federally run program is fully funded through 2035 and 73 percent funded through 2091, with 0.7 percent in administrative costs.

This is not to suggest that legislative changes are not needed. With the Baby Boomer generation leaving the workforce, it is projected that by 2035 the number of Americans 65 and older will increase from approximately 48 million today to over 79 million.34 There are currently 2.8 workers for each Social Security beneficiary; by 2035 that number will decline to 2.2.35 The Baby Boomer generation is also dependent on the safety net. Social Security benefits represent 34 percent of the income of the elderly and 31% of American workers report they and their spouse have no savings specifically set aside for retirement.36

Disability rates have also increased, from over 5 million Americans receiving benefits when President Bush took office in 2001 and expanding to just under 7.5 million through his presidency; this trend continued under President Obama, as SSDI beneficiaries grew by more than 1 million.37 When President Trump assumed the presidency, 8.8 million Americans were drawing disability benefits.38 In Tennessee and South Carolina, more than 8 percent of the population aged 18-64 is drawing SSDI or SSI; Arkansas, Alabama, Mississippi and Kentucky more than 10 percent; and in West Virginia, a staggering 12.4 percent.39 (Illinois 5.5%)40

Though not politically popular, tough decisions will need to be made to ensure the system can care for the growing number of beneficiaries. Adjustments may be required to beneficiary ages and benefit amounts. Increased revenue and reduced expenditures will also need to be addressed. New workers will be needed to replace the Baby Boomers leaving the workforce. Finally, an emphasis on investment in retraining workers who have left the workforce but who could return to work with new skills would moderate the number of disability recipients.

1. Soc. Sec. Admin, Research, Statistics & Policy Analysis, Monthly Statistical Snapshot, May 2017, available at
2. Id.
3. Soc. Sec. Admin., Publication No. 05-10003, January 2017, available at
4. Soc. Sec. Admin, Research, Statistics & Policy Analysis, Monthly Statistical Snapshot, May 2017, available at
5. Soc. Sec. Admin., Hearings and Appeals, Average Wait Time Until Hearing Held Report, June 2017, available at
6. Soc. Sec. Admin, Selected Data from Social Security’s Disability Program, June 2017, available at
7. Id.
8. Soc. Sec. Admin, Research, Statistics & Policy Analysis, Monthly Statistical Snapshot, MAY 2017, available at snapshot/
9. Soc. Sec. Admin., Fact Sheet 2017, available at
10. Soc. Sec. Admin, Research, Statistics & Policy Analysis, Monthly Statistical Snapshot, MAY 2017, available at
11. The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, The 2017 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, July 13, 2017, p.7, available at
12. Id.
13. Id. at p.8.
14. Id. at p.7.
15. Id. at p.8.
16. Id. at p.8.
17. Soc. Sec. Admin., Trust Fund Date, Old-Age, Survivors, and Disability Insurance Trust Funds, 1957-2016, available at
18. The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, The 2017 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, July 13, 2017, 2017, p.3, available at
19. Id.
20. Id. p.5.
21. Id.
22. Id. p.12
23. Soc. Sec. Admin, Research, Statistics & Policy Analysis, Monthly Statistical Snapshot, May 2017, available
at snapshot/
24. Stephen Goss et Al., Soc. Sec. Admin., Office of the Chief Actuary, Effects of Unauthorized Immigration
on The Actuarial Status of The Social Security Trust Funds, April 2013, available at https://www.ssa.
25. Id.
26. Id.
27. Soc. Sec. Admin., Selected Data from Social Security’s Disability Program, June 2017, available at
28. Id.
29. Id.
30. Soc. Sec. Admin., Hearings and Appeals, ALJ Disposition Date FY 2017, For Reporting Purposes: 10/01/2016 through 06/30/2017, available at
31. Id.
32. Id.
33. 20 C.F.R. § 404.1527 (2017)
34. Soc. Sec. Admin., Fact Sheet 2017, available at
35. Id.
36. Id.
37. Soc. Sec. Admin., Selected Data from Social Security’s Disability Program, June 2017, available at
38. Id.
39. Soc. Sec. Admin, Annual Statistical Report on The Social Security Disability Insurance Program, Disabled Beneficiaries Receiving Social Security, SSI, or both, p. 176, 2015, available at
40. Id.

Jon Walker practices in the area of Social Security Disability, Workers’ Compensation and Personal Injury with Woodruff Johnson & Evans. He is a 2004 graduate of the University of Illinois College of Law and a 2001 graduate of the University of British Columbia.

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