The Impact of the Coronavirus Pandemic on Social Security Finances

Jun 2, 2020 /

The coronavirus pandemic has had human and economic costs, with nearly 100,000 total deaths in the United States and more than 36 million new claims for unemployment benefits. The pandemic and policy responses to it will have long-term consequences for the federal budget and economy. The annual Social Security Trustees Report, released on April 22, 2020 relied on a pre-pandemic baseline. This post presents Penn Wharton Budget Model (PWBM) projections of how the coronavirus pandemic will affect the finances of the Social Security program.

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Americans Take a Dim View of Raiding Their Social Security to Cover Pandemic Expenses

May 29, 2020 /

Americans could use a financial boost. How to get that money into people’s hands has been a hot topic of debate. Democrats have proposed expanding unemployment insurance and giving Americans as much as $2,000 per month to get back on their feet. Meanwhile, one Republican proposal has called for giving Americans $11,000 now in exchange for every year they agree to delay their Social Security benefits and Medicare coverage. Now, a poll conducted by Data For Progress and Social Security Works, an advocacy organization, asked Americans which of those two options they would pick. They also asked if people think the government has already done enough.

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Lost Wealth Today Vs. The Great Recession

May 26, 2020 /

For older workers starting to think about retiring, the economic maelstrom the coronavirus set in motion is a reminder of that sinking feeling they experienced just over a decade ago. In 2008, the stock market plunged nearly 40 percent, accelerating the steep decline that was underway in U.S. house prices. The unfolding 2020 recession is playing out differently. But both downturns have one thing in common: Social Security as a stabilizing influence on older workers’ retirement finances.

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Older Adults Are Hit Hard by COVID-19—and Also Losing Jobs

May 22, 2020 /

The scale of the economic crisis caused by the coronavirus pandemic just came into clearer view with the release of the latest unemployment numbers. The unemployment rate among people age 65 and older quadrupled between March and April 2020 from 3.7% to 15.6%. By comparison, the overall unemployment rate tripled from 4.4% to 14.7%. From March to April, 1.2 million adults age 65 and older lost jobs, as did another 2.4 million people ages 55 to 64. Altogether, people 55 and older account for just under one fourth of all Americans who lost their jobs in April, which is proportional to their share of the workforce. More than 1 in 5 of the nearly 23 million Americans who are now unemployed are older adults (55+).

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Social Security Benefits Lose 30% of Buying Power Since 2000

May 19, 2020 /

Social Security benefits have lost 30% of buying power since 2000, according to the latest Social Security Loss of Buying Power study released last week by The Senior Citizens League (TSCL). “This year’s study found a three percentage point gain in the buying power of Social Security benefits over 2019,” says study author Mary Johnson, a Social Security policy analyst for the League. “That should indicate that most retirees may have seen at least some prices come down on certain items.” However, based on consumer price index (CPI) data through April of this year, Johnson estimates that the COLA for 2020 will be zero.

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SSA Employees Improve Productivity By Teleworking

May 15, 2020 /

The coronavirus pandemic has forced many people to work from home, and that includes some 53,000 workers at the Social Security Administration. Social Security field offices are closed. But the shutdown hasn’t stopped the agency from processing claims for new benefits and appeals of benefit denials. And according to statistics that the SSA sent its workers, the agency has been doing so at a faster pace than before.

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Celebrate Older American’s Month

May 12, 2020 /

Every May, the Administration for Community Living leads our nation’s observance of Older Americans Month. The theme for 2020 is “Make Your Mark.” This theme was selected to encourage and celebrate countless contributions that older adults make to our communities. Their time, experience, and talents benefit family, peers, and neighbors every day. Communities, organizations, and individuals of all ages are also making their marks. This year’s theme highlights the difference everyone can make—in the lives of older adults, in support of caregivers, and to strengthen communities.

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Medicare Applications Raise Anxiety for Seniors

May 8, 2020 /

At greater risk from COVID-19, some seniors now face added anxiety due to delays obtaining Medicare coverage. Advocates for older people say the main problem involves certain applications for Medicare’s “Part B” coverage for outpatient care. It stems from the closure of local Social Security offices in the coronavirus pandemic. Social Security handles eligibility determinations for Medicare, and while many issues can still be resolved online, some require personal attention. That can now entail hold times of 90 minutes or more to reach Social Security on its national 800 number, according to the agency’s website.

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Is Delaying Social Security Still Smart?

May 5, 2020 /

Among financial planning cognoscenti, the standard advice for Social Security is to delay filing past full retirement age for as long as you possibly can in an effort to enlarge your eventual benefit. After all, you can increase your benefit by about 8% for each year you wait past full retirement age up until age 70. But is the advice to delay still sound amid the current coronavirus crisis and market drop? After all, the pandemic has introduced some new challenges, both for investor portfolios and arguably for the program itself.

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How COVID-19 Might Affect Health Care Costs

May 1, 2020 /

As the coronavirus spreads rapidly across the United States, private health insurers and government health programs could potentially face higher health care costs. However, the extent to which costs grow, and how the burden is distributed across payers, programs, individuals, and geography are still very much unknown. This brief lays out a framework for understanding changes in health costs arising from the coronavirus pandemic, including the factors driving health costs upward and downward. We also highlight some special considerations for private insurers, Medicare, and Medicaid programs.

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SSA Releases Annual Trustees Report

Apr 28, 2020 /

The Social Security Board of Trustees released Wednesday its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2035, the same as projected last year, with 79 percent of benefits payable at that time. Notably, projections do not reflect potential implications of the COVID-19 pandemic.

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COVID-19 Brings End of Social Security Trust Fund Even Closer

Apr 24, 2020 /

Prior to the economic downturn—or collapse—that we’re now experiencing, the trust fund was projected to run out of money by 2035. This has, practically overnight, gotten worse. Why? Because some 22 million Americans have lost their jobs in the last four weeks. This means there are a lot fewer—millions fewer—people paying those payroll taxes into the Social Security system.

And on top of a lot less money coming in, a lot more will soon be going out. That’s because people who are now out of work and eligible to draw benefits may soon do so, out of sheer economic need.

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Social Security Tapped More in Downturns

Apr 21, 2020 /

It happened after the 2001 and 2008–2009 recessions, and it will happen again. Some older workers who lose their jobs will turn, in desperation, to a ready source of cash: Social Security. Age 62 is the earliest that Social Security allows workers to start their retirement benefits. In 2009, one year after the stock market plummeted, 42.4 percent of 62-year-olds signed up for their benefits, up sharply from 37.6 percent in 2008, according to the Center for Retirement Research (CRR).

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How the Coronavirus Could Permanently Cut Near-Retirees’ Social Security Benefits

Apr 17, 2020 / 1 Comments

As a group, retirees are more financially insulated from the economic effects of the COVID-19 pandemic than are most other demographic groups in the United States. Yet due to how the Social Security benefit formula interacts with the sharp economic downturn due to the Coronavirus, some groups of near-retirees are likely to suffer substantial permanent reductions to their Social Security retirement benefits. Assuming a 15 percent decline in the Social Security Administration’s measure of economywide average wages in 2020, a middle-income worker born in 1960 could have his annual Social Security benefits in retirement reduced by around 13 percent, with losses over the retirement period in excess of $70,000.

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These Social Security Beneficiaries Should File For Stimulus Checks

Apr 14, 2020 /

This week, the Treasury Department and IRS launched a web portal aimed at people who typically do not file tax returns, mostly because they have little to no taxable income. For most taxpayers, their payments will be based on their 2018 or 2019 tax returns. For Social Security recipients, the government plans to use their 1099 forms. But there are two groups of people who might want to use this portal: those with children under 17 and those who just started recieving Social Security benefits this year.

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What if This Gap Year Was Like Practice Retirement?

Apr 10, 2020 /

What if the world is meant to take a “gap year” as a result of the coronavirus? Sounds better than forced retirement, right? First off, let’s acknowledge that many of us are now working even harder from home, whether it’s due to the industry we’re in or the difficult fate our companies are facing. But many others are feeling idle and confused. If you’re one of them, how could you use this global timeout as an opportunity to make some substantive life changes? During this unusual time, some of us may be getting an early glimpse into what our retirement might look like. If so, what can we learn from the research showing that retirement accelerates one’s mortality rate, on average, by a couple of years? This advice may be good for you personally and for your clients.

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Money Shame Surfaces in Tough Times

Apr 7, 2020 /

It’s easy to overlook the emotions that swirl around money. But they often come to the surface when our financial security is thrown into question. The spread of the coronavirus has kicked Americans’ financial anxieties into high gear, a Kaiser Family Foundation poll found last week. More than half of the workers who were surveyed fear they will lose income when their workplace is closed or their hours are reduced. Even when financial problems stem from events that are outside of an individual’s control, a feeling of shame can take over. Shame is the thread running through three TED videos that explore the emotions around money.

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Warn Your Clients About Coronavirus Scams

Apr 3, 2020 /

Crisis brings out the best in some people and the worst in others. The COVID-19 pandemic is no exception. Scammers are working overtime preying on people's very real uncertainty and anxiety. Federal agencies are sounding alarms about Social Security and Medicare beneficiaries in particular, since this population is often more vulnerable to fraud. Here are some of the most common scams, and what your clients need to know.

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Social Security Beneficiaries to Receive Stimulus Checks Too

Mar 31, 2020 /

Federal lawmakers enacted a $2 trillion economic stimulus package Friday that will send most Americans checks of up to $1,200, as a way to put money directly in the pockets of families struggling to manage the economic fallout of the coronavirus pandemic. Individuals who are collecting Social Security benefits for retirement, disability or Supplemental Security Income will be eligible for the stimulus checks, based on their tax returns or Social Security Administration data. AARP successfully fought to guarantee that low-income Social Security recipients will receive the full $1,200 check, not $600 as originally proposed. Here’s what you need to know. Read more ...

WEP and GPO Relief No Longer in Sight

Mar 27, 2020 /

Long-shot legislation that would eliminate or modify two laws that reduce/eliminate the Social Security benefits of several million retired federal and public sector employees or their surviving spouses is almost certainly dead for the year, as the world seeks ways to halt the coronavirus. Opponents of WEP and GPO have been seeking repeal or modification for decades without success. Odds of any relief this year were already slim because this is an election year. And that was before the pandemic which has the country and Congress on a virtual lockdown.

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