Everything You Need to Know About Social Security and Disability During COVID-19


When a global pandemic hits, it’s not just people’s health that is impacted. In fact, nearly every aspect of society has been affected by Covid-19. Stock markets have taken a beating, the housing market has taken a nosedive and the entertainment sector has completely stalled.

Unfortunately, there’s no way to know when life will return to normal.

Already, the federal budget deficit could exceed $4 trillion this year. This is the highest dollar amount ever.

Covid-19 has had a significant impact on seniors, and not just in terms of health risks.

Many soon-to-be retirees have watched their savings go steadily down. Established retirees are also worried about their established benefit amounts.

The biggest question on their minds is “is social security going broke?” Read on for the answer on that and other questions about social security in light of Covid-19.

The Cost of Living Adjustment and Inflation

It’s important to note that the Social Security Administration (SSA) must adjust social security benefits to take into account inflation. Otherwise, the lifestyle of millions of Americans who collect social security benefits would be decreasing each year.

Social security benefits account for the increasing cost of living. Retirees received a 1.6% cost of living adjustment (COLA) in 2020. But that doesn’t mean this percentage goes up every year.

In 2019, the COLA was 2.8%. There have also been three years in the past decade where there was no COLA in social security.

So what is the plan for COLA for 2021? We won’t know for sure until the government announces it sometime during October this year. Yet, experts believe we will see a small COLA adjustment for 2021.

The administration figures out the upcoming year’s COLA percentage based on the Consumer Price Index. The price of goods tends to go up over time which means that COLA rises over time as well too. Luckily, if prices go down, retirees keep the same payout until inflation catches back up.

The CPI has been impacted by Covid-19. We have seen that certain expenses have seen big nosedive. As so many people are staying home to work, we are buying a lot less gasoline than we did this month last year.

That’s just one example. Besides the COLA, COVID-19 can also impact future benefits as well. We will discuss this later in this article.

Is Social Security Going Broke?

To reiterate again, your current benefits will not be affected by Covid-19. Yet, it is possible that your future checks might be less than you would like as a result of this virus.

If you didn’t know, the Social Security Administration uses payroll taxes in order to pay for social security benefits. Yet, with 26.8 million people unemployed due to the pandemic, there are millions of people no longer paying payroll taxes.

All in all, this shortage might affect how much cash the SSA has in the coffers to put towards social security payments.

Keep in mind that before Covid-19, the SSA was already facing a cash shortage and the coronavirus could make the situation bleaker.

In fact, for the past few years, the money the SSA has collected from payroll taxes has not been enough to pay the full amount of benefits paid out. The SSA has been pulling from its trust funds to pay social security benefits.

With the hit on payroll taxes due to unemployment, the SSA will have to draw even more from its trust funds to avoid reducing benefits.

Of course, the problem with this practice is that the trust funds could empty before 2035 at this rate.

Also, we haven’t seen the end of Americans losing their jobs. Plus, some seniors are now being forced to draw social security benefits earlier than they planned due to being laid off.

Beware of Social Security Scammers

For some reason, scammers are out in full force right now. Maybe it has to do with the fact that people are scared and vulnerable.

Whatever the reason, scammers are using this time of uncertainty and misinformation to try to take advantage.

There has been a huge influx of scams related to Covid-19 over the past few months. These scams are diverse and happening both online, via text message, and door-to-door.

Fraudsters are trying anything they can. They are selling bogus COVID-19 test kits and cures. They create fake fundraisers and give away masks asking for you to pay shipping and the masks never come.

There is also a social security scam popping up too. This scam involves sending you an official-looking letter or email that purports to be from the SSA. It indicates that your benefits have been suspended.

Often there is a link to click or a number to call in order to have the payments reinstated.

Don’t be fooled! These criminals want to get your personal information (including your bank information or social security number). Some scammers even demand payments in order to start getting your payments going.

Remember, the SSA will never ask for personal information over the phone or by email. Fraudsters prey on people’s worries. So if you are ever unsure about the legitimacy of a communication, call the SSA to find out.

Do not reply or call numbers in those suspicious letters. You can also report the scam to the Office of the Inspector General.

What is the Impact of COVID-19 on Social Security Benefits

A lot of people who are currently receiving social security benefits as well as those who are planning to retire are wondering about the future of social security benefits.

Is social security going broke is a common question.

The Center for Retirement Research at Boston College published a report to show how Covid-19 might impact the SSA’s ability to pay benefits.

The report shows that if Covid-19 causes a 20% decline in payroll tax revenue for this year and next, then the trust funds would be depleted by 2033.

Can This Issue Be Fixed?

Fixing social security is a huge, complicated issue that exceeds the scope of this article.

Yet, we will touch upon a couple of options so that you can get a sense of what the future might hold in terms of payroll taxes.

First of all, one option might be to increase the payroll tax. A 3.1% increase this year could allow the program to remain stable through 2094.

The longer we wait, the higher the payroll tax increase would have to be. A 4.1% tax increase in 2035 would be necessary to keep the program solvent.

Other options include reducing benefits by 19% in 2020 or reducing benefits by 25% in 15 years.

What About Denied Benefits?

When people are injured at the workplace and are unable to work, the SSA provides disability benefits for you to keep earning an income.

Unfortunately, the SSA often denies these applications. If you have been denied your rights to social security, you should contact social security lawyers for advice. They can help you make a game-plan for how to make a claim for a wrongly denied application.

How Covid-19 Impacts Future Retirees

Are you planning to retire in the next 10 years or so? Chances are you may get lower benefits from social security than you might expect.

That is unless Congress comes up with a solution soon. But if not, it is vital that upcoming retirees make plans not to rely too much on your benefits in retirement. Even though social security should replace about 40% of your income, you may want to be safe and assume your monthly payments will cover a smaller percentage.

If you have the means to do so, it is a wise idea to grow your retirement fund now so that you have more cushion during retirement.

Even though the economy is not in great shape this year, it will eventually stabilize. If you can plan smart now then you may be able to ride the tide and be prepared to enjoy a comfy retirement.

COVID-19 Can Impact Your Highest Earning Years

This wave of unemployment due to Covid-19 can also impact you in a different way.

Your social security benefits are calculated on the highest 35 years of earnings during the entirety of your career. Many people climb the ladder and end their careers at the top of their earning history.

Yet, if you have to retire early due to Covid-19 or spend time in unemployment, then this may impact your highest earnings. That means that the calculations for your benefits be lower.

Social Security Now and Later

Thanks for reading. We hope that this article has answered your questions and given you concrete information so you can take the necessary next steps.

So, to recap on your question: is social security going broke? the answer is yes.

But hope is not last. Congress may put plans into place that will allow the SSA to continue to pay benefits to millions of deserving Americans.

Come back soon for more informative articles like this one.


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