Social security disability scheme faces censures though it is primarily meant as a welfare program. This article examines the issues involved and the solutions put forth to handle the situation.

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Is Social Security Disability a Ponzi
Scheme? Have Seniors “Really Paid
Their Own Way?”
Social security disability scheme faces censures though it is
primarily meant as a welfare program. This article examines
the issues involved and the solutions put forth to handle the
situation.
Though named after Charles Ponzi who earned his notorious
reputation for indulging in fraudulent money-making in the
1920s, the “Ponzi scheme” has existed even before his time.
Charles Ponzi issued bonds that paid back an unbelievable
50% interest in a matter of 45 days, or 100% profit in just 90
days. Ponzi used to take the money invested by his second set
of investors to pay the first set of investor, and repeat this
practice. How is SSD similar to a Ponzi scheme? The
similarity is only superficial in that money collected from new
workers is being used to pay the benefits for retired and
disabled workers. It is to be noted that not only government,
but private pension systems also use this “pay-as-you-go”
system. The problem with federal programs such as Social
Security is that though implemented with public interests in
view, they may not be feasible for the long term, especially
when the number people investing money continue to get
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lower compared to the number of people to whom benefits are
to be paid.
Since the creation of this scheme, retirees and disabled have
been receiving benefits that were much more than their
investments. For the disabled, payment is made on the basis of
a thorough medical record review. This is to ensure that the
disabled beneficiary still meets the plan’s definition and is
entitled to receive benefits.
Payment of large amount of benefits for retirees/disabled has
led to added financial burden on later generations. Every time
Social Security expanded, the already retired paid no additional
taxes, and those near retirement paid for a few more years.
They received benefits, adding on to the burden to be carried
by later generations. In 1960, the Disability and dependents’
benefits were added to Social Security, and Medicare was
added in 1966. Medicare Part B expanded the benefits, wherein
only a quarter was funded by recipients, and in Part D
prescription drug benefit, only 1/8th was funded by
beneficiaries.
Social Security was signed into law in 1935 by Franklin
Roosevelt at a time when the average life expectancy was 61.7
years while the Social Security retirement age was 65 (i.e. 3.3
years later.) According to the U.S. Centers for Disease Control
and Prevention’s National Center for Health statistics, the
average life expectancy for Americans has increased from 78.6
years in 2009 to 78.7 in 2010. However, the Social Security
eligibility age continues to be the same. This is the main reason
for the impracticality of the Social Security program. Going by
Roosevelt’s reasoning, the Social Security eligibility age
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should be raised from age 62, the common age people start
receiving SS benefits.
According to a report in cnsnews.com that highlights new data
released by the Social Security Administration trustees, over
the last five years the number of people receiving disability
benefits has phenomenally increased. Consequently, the
surplus in that fund has been reduced from $216 billion in
2008 to little more than $ 100 billion in 2013. In January 2009
there were 7.4 million beneficiaries while the number has gone
up to nearly nine million in October 2013. In addition, there
are another 2 million spouses and children of disabled
employees who are receiving benefits.
Undoubtedly, it’s high time the concerned authorities took
matters in hand, held discussions and adopted constructive
measures to change the Social Security system.
Amy Ridenour in her write-up in GazetteXtra addresses this
major concern regarding Social Security benefits and suggests
some remedial measures. Social security eligibility age should
ideally be raised to 70 or higher; the concept that employees
should be saving money to retire need to be revived; younger
workers should be allowed to invest their payroll taxes in
traditional, regulated investments that grow over the years; and
full benefits should be assured to people retiring or about to
retire.
Posted by MOS Medical Record Review Company
http://www.mosmedicalrecordreview.com/
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