Bush’s Social Security plan may touch disability benefits

WASHINGTON – Social Security disability benefits may not be safe from the across-the-board cuts that are likely in President Bush’s proposal to allow personal investment accounts.

Retirement and disability benefits are calculated using the same formula, so if future promised retirement benefits are cut, then disability benefits also would be reduced – unless the program is somehow separated.

That also raises questions about how investment accounts would be structured for disabled people, especially if they get injured at a young age or are dependent on a parent. Disabled beneficiaries typically work less and need benefits sooner, so the accounts would not provide enough income to these people.

Disabled workers often are unaware they draw their benefits from the disability program until they reach retirement age and shift to the retirement program. That would change with investment accounts, advocates claim, with people falling through the holes.

About 16 percent of people receiving Social Security benefits are disabled workers and their dependents. The impact of accounts on beneficiaries who aren’t retirees hasn’t been publicly discussed yet by the Bush administration.

“The proper way to deal with this is to essentially make it clear that these are two different programs and to separate the benefit formulas,” said David John, Social Security senior analyst at the conservative Heritage Foundation.

Disability advocates argue the two programs can’t easily be separated. Bush wants to let younger workers invest much of their 6.2 percent in payroll taxes into personal investment accounts, similar to a 401(k). Of the tax, 0.9 percentage point funds disability benefits; the rest is for retirement benefits.

Almost three in 10 of today’s 20-year-olds will become disabled before reaching age 67, according to the Social Security Administration.