Question: A.N. from Hamilton County: I’m wondering if you think all the layoffs and furloughs from COVID-19 will impact the future of Social Security benefits?
Answer: This is something we’ve been thinking about lately, especially since the 2020 Social Security Trustees Report just came out a few weeks ago. In it, we learned that the Social Security Administration is expecting its ‘trust fund’ to run out by 2035 (this is consistent with previous projections over the last few years). Assuming Congress takes no action in the interim and the trust fund is exhausted, beneficiaries should only expect to receive about 79 % of their promised benefits at that time.
However, this report came out before the COVID-19 crisis. And, given that 26 million Americans have been laid off, it means these workers are not paying payroll taxes (nor their employers), which is one of the three main ways Social Security is funded. Because of this and other combinations of factors, the Bipartisan Policy Center now estimates the aforementioned trust fund will be depleted in 2029 – six years sooner.
The Simply Money Point is that this projection is fluid and only the opinion of one organization. But the reality is that COVID-19 could potentially have sweeping ramifications on this country for years to come. This is just one more reason why you should never plan to rely on Social Security payments to fund 100% of your retirement.