'Start saving now' for 'collapse' of Social Security system, warns former chief

Cutting the workforce at the Social Security Administration could be devastating for millions of American retirees and disabled people, according to a former agency chief, despite reassurances from the agency.   

The SSA has confirmed plans to cut around 7,000 from its headcount in line with recent executive orders from the White House on recommendation of Elon Musk’s DOGE. It will reduce the workforce at the SSA to 50,000, although the cuts are well short of the halving of its team that has been reported by some media outlets.

“The agency plans to reduce the size of its bloated workforce and organizational structure, with a significant focus on functions and employees who do not directly provide mission critical services,” the SSA statement said, adding that it hoped much of the reduction would come from retirement, resignation, or buyouts.

But a former SSA commissioner, Martin O’Malley, says there could be serious problems ahead for the roughly 70 million people who rely on Social Security payments.

"Ultimately, you're going to see the system collapse and an interruption of benefits," O'Malley told CNBC. "I believe you will see that within the next 30 to 90 days." He warned those who receive benefits currently to “start saving now.”

Longer term, a reduced workforce could be especially problematic for new claimants, with the process requiring human input, compared to automated processes such as payments for existing claimants.

Many older people are already concerned and confused about what’s happening, according to Nancy LeaMond, EVP and chief advocacy and engagement officer at AARP, a non-profit that aims to empower people as they age.

“AARP is hearing from thousands of older Americans confused and concerned about their Social Security payments, the status of Social Security field offices, and inexcusably long wait times on the phone to get their questions answered,” she said, adding that AARP has been calling for improved customer service at SSA for decades.

AARP is calling on officials to assure Social Security recipients that their calls will be handled in a timely manner and that payments will not be interrupted.

“Americans earned their Social Security through a lifetime of hard work with the promise that it will be there for them when they retire,” LeaMond said. “It is the primary source of income for most older Americans, and nearly one in five rely on it for almost all of their income. Its vital role in Americans' lives – and its broad, bipartisan support – cannot be overstated.”

RECKLESS AND GROSSLY UNFAIR

Meanwhile, the National Committee to Preserve Social Security and Medicare condemned the cuts to the SSA workforce as “reckless and grossly unfair” in a statement from president and CEO Max Richtman.

“Compelling employees with seniority and experience to retire early while hoping to retrain remaining ones is a recipe for disaster. Social Security has not missed a single payment during its entire 89-year history. These actions put that record at risk,” Richtman warned.

The SSA’s statement said that its current regional 10-office structure was “no longer sustainable” – it will cut back to four regions – and that the organizational structure of its headquarters is “outdated and inefficient.”

It said that changes being made would cut costs but stressed that “SSA is committed to ensure this plan has a positive effect on the delivery of Social Security services.”