Pandemic’s impact on Social Security services, funding

Social Security Administration Commissioner Andrew Saul warns that underfunding the system will increase benefit delays.

The Covid-19 pandemic has taken a toll on the Social Security system, both in terms of how long it takes to process benefits today and how well the program will be financed in the future.

Social Security Commissioner Andrew Saul warned this week that his agency will not be able to process benefits on a timely basis unless Congress increases its budget for more frontline workers and improved technology. Meanwhile, Social Security watchers are anxiously awaiting the release of the annual trustees’ report for a snapshot of how the economic fallout from the pandemic will affect the solvency of the critical retirement program.

At the start of the pandemic in March 2020, SSA closed its field offices to the public except for the most critical cases that could only be solved in-person, shifting the bulk of its operations online and over the phone. The field offices remained closed today.

“The abrupt changes to the way we do our work has caused bottlenecks in certain workloads and service deterioration beyond our control,” Saul wrote in a letter to Rep. John Larson, D-Conn. and chairman of the Ways and Means Subcommittee on Social Security. “2021 is a critical year to shape the agency for post-pandemic success, but our resources constraints will delay our recovery.”

While President Joe Biden’s budget request for the Social Security Administration of nearly $14.2 billion dollars for fiscal year 2022, which begins Oct. 1, represents a $1.3 billion increase over the current year’s budget, is still not enough, Saul said. In addition to processing applications for retirement and survivor benefits, SSA is also charged with handling more complicated requests for disability benefits.

“These [funding] decisions have a lasting negative impact on the service we can provide to the American public,” he warned in an earlier letter to the same subcommittee. “It will increase waits for service from our field offices and on our 800 number as we begin to emerge from the pandemic.”

Meanwhile, it has been a little over a year since the Social Security trustees issued their last report on the financial outlook of the nation’s essential retirement program. But it looks as if we may have to wait a bit longer to get an update on how the economic fallout from Covid-19 pandemic affected the crucial benefits program that relies largely on payroll taxes for its funding.

Last year, the Social Security and Medicare Trustees’ annual report released on April 22, 2020, projected the combined reserves of the retirement, survivor and disability program would be depleted in 2035 — unchanged from the previous year’s report.

The trustees predicted Social Security would be able to pay only 79% of projected benefits from ongoing payroll tax revenue in 2035, potentially resulting in a 21% across-the-board cut in benefits for all beneficiaries less than 15 years from now. But that report did not reflect the potential impact of the Covid-19 pandemic.

At the time, several organizations that closely monitor Social Security policy and funding issued warnings that the pandemic-induced recess would accelerate depletion of the trust funds. But the economy has bounced back faster and stronger than previously forecast, mitigating some of those doomsday forecasts.

For example, the Bipartisan Policy Center, a Washington, D.C.-based think tank, had predicted that the combined Social Security trust funds could be depleted as early as 2029 if the impact of the pandemic’s economic downturn were similar in duration and intensity to the once during the Great Recession.

“It looks like economic impact will be closer to modest recession,” Shai Akabas, director of economic policy at the Bipartisan Policy Center, said in an interview this week. He noted that while millions of people lost their jobs, others were able to continue to work remotely, resulting in K-shaped recovery in which parts of the economy suffered while others boomed.

“The people who were the least impacted by the recession pay the most Social Security taxes,” Akabas explained.

Such dire warnings about the program’s finances prompted Joe Elsasser, president of the Covisum financial software company and financial planning firm, to create a free calculator consumers can use to gauge the impact of potential impact of future Social Security benefit cuts on their lifetime income. It’s a simplified version of the firm’s Social Security claiming tool for financial advisers.

The calculator is a designed to help consumers make rational decisions about when to claim Social Security in the event the next trustees’ report shows a further deterioration in the programs’ finances. By supplying their year of birth and full retirement age benefit amount, an individual can see the impact of future benefits based on the size of a potential cut and the year it would begin. The default values are a 29% cut beginning in 2029. Users can email their results to their adviser.

“The tool demonstrates that even with a dramatic benefit cut, there is still value for most people in delaying benefits, though not as much as before any cuts,” Elsasser said. “It is an attempt to debunk knee-jerk reactions to claim early.”

(Questions about Social Security rules? Find the answers in Mary Beth Franklin’s ebook at

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