What Will Happen to My Social Security if the Government Shuts Down?
Every time a government shutdown is in the news, I get calls asking "Is Social Security affected by a government shutdown?"
The current big question is "How will Social Security be affected if the government defaults?"
Many Social Security Disability claimants and recipients are wondering what happens to social security and their benefit checks, application, and/or hearing if the government shuts down.
Social Security can be affected by a government shutdown depending on your situation.
Are Social Security Checks Affected by a Shutdown?
Are Social Security Offices Closed During a Government Shutdown?
Will my Scheduled Social Security Disability Hearing be Held during a Government Shutdown?
What Happens to My Social Security Disability Application During a Government Shutdown?
What Happens to Social Security Disability Benefits if the Government Defaults on Its Debt?
Are Social Security Checks Affected by a Shutdown?
The first thing most people want to know is "Will I Still Receive my Social Security Disability Benefits in a Government Shutdown?"
When the federal government shut down in 1995 and again in 2013, all Social Security payments continued to be sent out on time. This included Social Security Disability.
During the 1995 shutdown, which lasted about a month, the Social Security Administration mailed checks throughout the shutdown.
Social Security was able to continue mailing benefits due to the fact that doesn’t need Congress to authorize funds for it each year.
Instead, Social Security benefits are considered mandatory spending and are paid from the program’s trust fund, and therefore, the agency has the funds to continue paying benefits. A law passed by Congress in 1996 provides special protections for Social Security benefits.
In 1995, Social Security maintained enough employees to continue mailing checks without delay.
Since payments are now direct deposited and/or loaded onto debit cards, Social Security continued processing payments during the 2013 shutdown with fewer employees than were needed to mail benefit checks during the 1995 shutdowns.
Unfortunately, there is an additionalreason to worry about a government shutdown and social security checks in 2021.
While payments can continue to be processed during a government shutdown, it is possible that there would not be sufficient funds to pay for benefits if the debt ceiling is not raised. Unlike previous shutdowns, this battle is not just about passing a spending bill to fund the government, but also about raising the debt ceiling.
At this time is it uncertain where the government would make spending cuts if it is unable to borrow the money needed to continue spending at its current pace.
Social Security beneficiaries could be atrisk of not receiving their benefits for the first time since the program was established in 1935.
Are Social Security Offices Open During a Shutdown?
Currently, most local Social Security offices are already closed to in-person visits due to COVID-19 precautions.
The Social Security Administration is asking the public to first try to use their online services before calling them.
During a government shutdown, many SSA employees will be furloughed and staffing will be limited. Using online services before calling is still the best course of action.
If you cannot use these online services, you can find the phone number for your local office by using the Field Office Locator.
What Happens to my Scheduled Social Security Disability Hearing in a Government Shutdown?
Most likely, hearing offices will continue to hold Social Security Disability and SSI hearings if a shutdown occurs.
During the 2013 government shutdown, the Office of Disability Adjudication and Review (ODAR) still held previously scheduled hearings, but staffing was limited to Administrative Law Judges (ALJs), medical experts, vocational experts, and security personnel.
New hearings were not scheduled.
Lack of support personnel caused delays in exhibiting files and decisions were not written during the shutdown.
So, if a claimant was waiting for an already scheduled hearing, it in most cases proceeded and was decided.
But, the writing of the decision did not take place, so if benefits were granted, there was a further delay before benefits were paid since the decision was not actually formally written until the shutdown ended.
What Happens to My Social Security Disability Application in a Government Shutdown?
During the Clinton-era shutdown, new Social Security claims were not being processed because the agency furloughed 61,415 employees. As the shutdown wore on, the agency adjusted its plan and recalled workers to start processing new claims. Whether new claims are processed at all or with a delay due to fewer workers will depend on how many employees the SSA decides to maintain and how many they decide to furlough.
The SSA’s 2013 government shutdown contingency plan stated that new and pending Social Security applications would continue to be processed as well as requests for appeals.
However, because these functions are carried out by the state Disability Determination Offices, each state will decide whether to continue these operations or stop them.
The most likely scenario is that applications will be processed but with some delay.
The delay will be dependent on how many employees are retained and how long the shutdown lasts.
What Happens to Social Security Disability Benefits if the Government Defaults on Its Debt?
Crossing the debt limit “X Date” and a government shutdown are separate events, and because of that, they have two substantially different sets of consequences.
The debt ceiling was first established in 1917 and sets the maximum amount of outstanding federal debt the U.S. government can incur. Since then, it has been suspended or increased more than 100 times, frequently accompanied by political theatrics. However, the 2011 debt ceiling crisis resulted in Standard and Poor's lowering the US debt rating for the first time in history. Additionally, in 2013, the nation nearly defaulted with only a few days to spare.
In January 2023, the total national debt and the debt ceiling both stood at $31.4 trillion. Historically, the debt ceiling has been raised at the last minute before it was reached. However, in 2023, this was not the case. Without raising the amount that can be borrowed, the US risks defaulting on its financial obligations. Since January, the Treasury has staved off a default with a series of temporary actions it calls “extraordinary measures.” These include suspending payments to some government employee savings programs, underinvesting in certain government funds, and delaying auctions of securities. However, they have warned that they will run out of money by June 1, and at that point, if the debt ceiling has not been raised, the U.S. government will default on its loans and obligations.
Thanks to a law passed by Congress in 1996 (Section 1145, "Protection of Social Security and Medicare Trust Funds"), Social Security checks should keep flowing, even if the U.S. government begins defaulting on its other existing financial obligations. This law allows and effectively obligates, the circumvention of the debt ceiling by disinvesting Social Security's asset reserves to cover benefits.
Since Social Security's inception, the program has collected more revenue than it paid in benefits and other administrative expenses. This excess cash, known as Social Security's "asset reserves," is required by law to be invested in interest-bearing special-issue bonds and, to a lesser extent, certificates of indebtedness. As of March 31, 2023, the Old Age and Survivors Insurance Trust (OASI) and Disability Insurance Trust (DI) combined for $2.814 trillion in asset reserves.
Also of note, the program generates about 90% of its revenue from the 12.4% payroll tax on earned income (wages and salary, but not investment income). As long as Americans keep working and paying their taxes, Social Security will continue to have money to disburse to eligible beneficiaries.
Nonetheless, a potential problem could emerge if there are delays or disturbances in redeeming the bonds held by Social Security for its funds. Or if there are not enough Social Security Administration employees available to process the payments.
If the debt ceiling is not raised before funds run out, a default could affect many programs that are relied on to supplement Social Security payments like SNAP benefits causing further disruption to benefit recipients.
The Takeaway
The government briefly shut down fully twice in under a month in early 2018. On December 22, 2018, the government entered a partial government shutdown after President Trump would not sign the temporary spending bill passed by Congress. This shutdown was only a partial shutdown due to the fact that some departments had already been funded through September 2019. The Department of Health and Human Services which includes Social Security was included in this previous spending bill and therefore was not affected by this partial shutdown.
Unfortunately, due to the current trend of Congress only approving short-term stop-gap measures instead of long-term spending bills, the threat of a government shut down is now a common occurrence.
Whenever a threat of a shutdown looms, I monitor the situation by checking Social Security's contingency plan often.
If the government shuts down again and/or the debt ceiling is not raised, I will be in touch with all of my current clients to advise them on how this situation will affect them depending upon the current status of their claim.
Government shutdowns and defaults are often averted at the last minute. Hopefully, that will be the case again this time as well.
FAQs
Is Social Security Affected by a Government Shutdown or Default? ›
Will I continue to receive my Social Security and SSI checks? During a government shutdown, recipients will continue to receive their Social Security and SSI checks. However, a shutdown suspends the issuance of Social Security cards.
Is the government shutdown going to affect Social Security payments? ›Government shutdowns don't hit payments for Social Security, Medicare or Medicaid, since Congress places those programs in the mandatory category that's exempt from the annual government funding process and therefore predominantly exempt from funding lapses.
Would a government default affect Social Security? ›Analysts suggest it isn't certain that the government will miss payments to Social Security recipients in the event of a default. The matter would likely depend on how much cash is on hand if or when the debt ceiling is breached.
Is Social Security affected by the debt ceiling? ›If the US is not able to pay all its bills for the first time ever, senior citizens could quickly feel the pain.
Why would Social Security benefits be suspended? ›Benefit suspensions occur when a beneficiary is no longer eligible for SSI benefits. For example, the person has amassed over $2,000 in resources, their work earnings exceed SGA, they are hospitalized for longer than 30 days, or they become incarcerated.
Will Social Security payments decrease in 2023? ›Key Takeaways. Social Security recipients will get an 8.7% raise for 2023, compared with the 5.9% increase that beneficiaries received in 2022. Maximum earnings subject to the Social Security tax also went up, from $147,000 to $160,200.
Is there going to be an increase in Social Security payments? ›Social Security benefits and Supplemental Security Income (SSI) payments will increase by 8.7% in 2023. This is the annual cost-of-living adjustment (COLA) required by law. The increase will begin with benefits that Social Security beneficiaries receive in January 2023.
How do I get the $16728 Social Security bonus? ›To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.
Can the government lower your Social Security benefits? ›If you receive a retirement or disability pension from a federal, state, or local government based on your own work for which you didn't pay Social Security taxes, we may reduce your Social Security spouses or widows or widowers benefits. This fact sheet provides answers to questions you may have about the reduction.
What can reduce your Social Security? ›If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount. If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2023, that limit is $21,240.
Can debt collectors take your Social Security money? ›
Generally no, debt collectors can't take your Social Security or VA benefits directly out of your bank account or prepaid card. After a debt collector sues you for the debt and wins a judgment, it can get a court order for your bank or credit union to turn over money from your account or prepaid card.
What is the Social Security 5 year rule? ›You must have worked and paid Social Security taxes in five of the last 10 years. • If you also get a pension from a job where you didn't pay Social Security taxes (e.g., a civil service or teacher's pension), your Social Security benefit might be reduced.
Does Social Security not keep up with inflation? ›Social Security recipients do not automatically receive a COLA increase every year. The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as calculated by the Bureau of Labor Statistics (BLS), part of the U.S. Department of Labor.
Can your Social Security be Cancelled? ›You can only cancel your application once and can reapply later. If you've begun receiving payments, you will have to repay the money you and your family received, as well as money we withheld for Medicare premiums, taxes, and garnishments.
Can my Social Security be stopped? ›If you are already entitled to benefits, you may voluntarily suspend retirement benefit payments up to age 70. Your benefits will be suspended beginning the month after you make the request.
What is one reason Social Security is running out? ›There are fewer workers left to contribute to retirement benefits as the U.S. population ages and more Baby Boomers retire. The Social Security retirement trust fund is projected to be depleted by 2033 as a result.
What is the projected 2023 Social Security increase? ›Forecasts say it may be stingier in 2024. This year, the nation's 66 million Social Security recipients got their biggest benefit hike since 1981 — an 8.7% cost-of-living adjustment meant to help offset the highest inflation in four decades.
What are the new Social Security rules for 2023? ›For 2023, the Supplemental Security Income (SSI) FBR is $914 per month for an eligible individual and $1,371 per month for an eligible couple. For 2023, the amount of earnings that will have no effect on eligibility or benefits for SSI beneficiaries who are students under age 22 is $8,950 a year.
What will be the maximum Social Security benefit in 2023? ›The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2023, your maximum benefit would be $3,627. However, if you retire at age 62 in 2023, your maximum benefit would be $2,572. If you retire at age 70 in 2023, your maximum benefit would be $4,555.
What is the average Social Security check? ›According to the Social Security Administration (SSA), the average monthly retirement benefit for Security Security recipients is $1,781.63 as of February. Several factors can drag that average up or down, but you have the most control over the biggest variable of all — the age that you decide to cash in.
What is the highest Social Security payment? ›
- Step 1: Work a minimum of 35 years. ...
- Step 2: Earn an income equivalent to or greater than the wage cap. ...
- Step 3: Delay your Social Security claim until age 70.
The 2024 Social Security cost-of-living adjustment could be 3.1%, or lower. Inflation led to the highest cost-of-living adjustment in 40 years for Social Security beneficiaries this year, with checks increasing 8.7%. But with inflation cooling, the COLA could be less than half of that next year.
How do I get 100% Social Security? ›If you start receiving benefits at age 66 you get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase. The chart below explains how delayed retirement affects your benefit.
At what age is Social Security no longer taxed? ›Social Security benefits may or may not be taxed after 62, depending in large part on other income earned. Those only receiving Social Security benefits do not have to pay federal income taxes.
What is the secret Social Security bonus? ›There is no specific “bonus” retirees can collect from the Social Security Administration. For example, you're not eligible to get a $5,000 bonus check on top of your regular benefits just because you worked in a specific career. Social Security doesn't randomly award money to people.
Which president started borrowing from Social Security? ›| 1. | SOCIAL SECURITY SYSTEM--May 9, 1977 |
|---|---|
| 2. | REMARKS ON SIGNING H.R. 3 INTO LAW-- October 25, 1977 |
| 3. | SOCIAL SECURITY FINANCING BILL -- October 27, 1977 |
| 4. | SOCIAL SECURITY FINANCING LEGISLATION -- December 1, 1977 |
| 5. | SOCIAL SECURITY AMENDMENTS OF 1977 --December 20, 1977 |
Basically, if you're 65 or older, you have to file a tax return in 2022 if your gross income is $14,700 or higher. If you're married filing jointly and both 65 or older, that amount is $28,700. If you're married filing jointly and only one of you is 65 or older, that amount is $27,300.
Will Social Security exist in 30 years? ›The Future of Social Security
Social Security may look drastically different in the next few decades, especially since the Social Security Administration's 2023 Trustees Report estimates that the Old-Age and Survivors Insurance (OASI) Trust Fund, which pays out Social Security benefits, will be depleted by 2033.
Selling Your Home While on Social Security Benefits
With the sale of your home, your income may increase enough to make you no longer eligible for SSI and Medicaid. After you sell your home, you have three months to buy a new home.
Pension payments, annuities, and the interest or dividends from your savings and investments are not earnings for Social Security purposes. You may need to pay income tax, but you do not pay Social Security taxes.
What is the average Social Security check at age 66? ›
At Age 66-67
In 2022, the average Social Security check was around $1,720 for a 66-year-old and $1,845 for a 67-year-old. That's $20,640 to $22,140 a year.
The Social Security Administration can only check your bank accounts if you have allowed them to do so. For those receiving Supplemental Security Income (SSI), the SSA can check your bank account because they were given permission.
Can a credit card company sue you if your on Social Security? ›Are Social Security Benefits Protected? Federal income retirement benefits are protected from commercial garnishment through the federal Consumer Credit Protection Act. This means Social Security and other federal benefits can't be garnished by credit card companies, for medical bills, and other commercial creditors.
How often does Social Security check your bank account? ›There isn't a set schedule or a guaranteed timeline as to how frequently your accounts might be monitored. It could be once a year, twice a year, or only once every few years. Often, it will depend upon circumstances, and the schedule set forth by the SSA.
Will Social Security end in 13 years? ›But the number of people receiving Social Security is outpacing the number of people paying into the program, and by 2035 the Social Security program's trust fund reserves will be depleted.
Can two wives collect Social Security from one husband? ›Can I claim benefits on either one's record? Yes, you can. Notify the Social Security Administration that you were married more than once and may qualify for benefits on more than one spouse's earnings record. They will be able to tell you which record provides the higher payment and set your benefit accordingly.
What percentage of a husband's Social Security does a wife get? ›Social Security Program Rules
The wife of a retired worker is eligible for a spousal benefit of up to 50 percent of her husband's primary insurance amount ( PIA ), if claimed at her full retirement age ( FRA ).
While the 2022 COLA adjustment was 5.9%, government inflation data showed costs grew at a faster pace for much of last year. Now, the 8.7% COLA for 2023 is outpacing current inflation, with a 5.8% increase over the past 12 months for the consumer price index for urban wage earners and clerical workers, or CPI-W.
Will inflation go down in 2023? ›After peaking at 6.2% in 2022, we expect inflation to fall to 3.5% for 2023. Over 2024 to 2027, we expect inflation to average just 1.8%—below the Fed's 2% target.
What is it called when money becomes worthless? ›Inflation becomes hyperinflation when the increase in money supply turns specific areas of pricing power into a general frenzy of spending quickly before money becomes worthless. The purchasing power of the currency drops so rapidly that holding cash for even a day is an unacceptable loss of purchasing power.
What happens when Social Security runs out of money? ›
Even if the trust fund becomes depleted, the Social Security Administration will continue to take in payroll taxes from workers and their employers, allowing the program to pay the majority of benefits, experts note.
Is Social Security going to end in 2023? ›According to the 2023 annual report of the Social Security Board of Trustees, the surplus in the trust funds that disburse retirement, disability and other Social Security benefits will be depleted by 2034.
Does inheritance affect Social Security? ›Income from working at a job or other source could affect Social Security and SSDI benefits. However, receiving an inheritance won't affect Social Security and SSDI benefits.
Do Social Security payments stop during a government shutdown? ›Will I continue to receive my Social Security and SSI checks? During a government shutdown, recipients will continue to receive their Social Security and SSI checks. However, a shutdown suspends the issuance of Social Security cards.
Is Social Security affected by debt ceiling? ›If the US is not able to pay all its bills for the first time ever, senior citizens could quickly feel the pain.
Why is Social Security not being taken out? ›Some workers are exempt from paying Social Security taxes if they, their employer, and the sect, order, or organization they belong to officially decline to accept Social Security benefits for retirement, disability, death, or medical care.
What happens if the US hits debt ceiling? ›Potential repercussions of reaching the ceiling include a downgrade by credit rating agencies, increased borrowing costs for businesses and homeowners alike, and a dropoff in consumer confidence that could shock the United States' financial market and tip its economy—and the world's—into immediate recession.
What happens if the debt ceiling isn't raised? ›That could mean higher mortgage rates and borrowing costs for everyone, adding to inflation and placing further drag on an economy now in slowdown. And even if the default is only temporary, it could mean higher borrowing costs for the government, further worsening the nation's fiscal situation.
What does the debt ceiling affect? ›According to Moody's, even a short debt limit breach could lead to a decline in real GDP, nearly 2 million lost jobs, and an increase in the unemployment rate to nearly 5 percent from its current level of 3.5 percent.
What is debt ceiling bill? ›The debt ceiling bill that House Republicans passed in April would have returned discretionary spending to fiscal 2022 levels and then limited the growth in spending to 1% for a decade. Defense spending would have been protected.
What is the safest place for money if the government defaults? ›
Treasurys have been seen as some of the safest investments worldwide. They are held by companies and countries the world over and used as collateral in all kinds of financial transactions. If the federal government failed to pay bondholders, it would have unimaginable consequences for the standing of the U.S.
What would happen if the US defaulted? ›A default could shatter the $24 trillion market for Treasury debt, cause financial markets to freeze up and ignite an international crisis.
What happens if the US defaults on the debt? ›So if the U.S. cannot pay its creditors, interest rates on U.S. debt would go up, creating a cascade of higher interest rates. So mortgage rates, credit card rates, car loan rates. All would become more expensive. Finally, there is a real concern about the economy — that a default could spark a recession.
What country has the most debt? ›- Sri Lanka. ...
- Portugal. Debt to GDP Ratio: 114% ...
- Cuba. Debt to GDP Ratio: 117% ...
- Bahrain. Debt to GDP Ratio: 120% ...
- Zambia. Debt to GDP Ratio: 123% ...
- Suriname. Debt to GDP Ratio: 124% ...
- Bhutan. Debt to GDP Ratio: 125% ...
- United States. Debt to GDP Ratio: 129%
Investors in Japan and China hold significant shares of U.S. public debt. Together, as of September 2022, they accounted for nearly $2 trillion, or about 8 percent of DHBP. While China's holdings of U.S. debt have declined over the past decade, Japan has slightly increased their purchases of U.S. Treasury securities.
Where does the US borrow money from? ›The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are: Backed by the full faith and credit of the United States government. Offered in a wide range of maturities.
How much debt is the US in 2023? ›The deficit is projected to fall to $1,154 billion billion in 2023, and debt held by the public is projected to grow to $26,033 billion, but fall as a percent of GDP, to 101.8 percent. After 2023, the deficit is projected to roughly stabilize at around 5 percent as a percent of GDP.
What does the 14th Amendment have to do with the debt ceiling? ›Clause 4 of the 14th Amendment states that the “validity of the public debt of the United States … shall not be questioned”. By invoking this provision, Biden could order the US Treasury to keep issuing bonds and keep paying the government's bills.
Has Biden signed the debt ceiling? ›Biden signed H.R. 3746, the “Fiscal Responsibility Act of 2023,” two days before Monday's default deadline, on which the U.S. would run out of cash to pay its bills. President Joe Biden on Saturday signed the debt ceiling bill, a capstone to months of negotiations that pushed the U.S. to the brink of default.
Has Biden signed the debt ceiling deal? ›President Joe Biden signed into law Saturday a bill to suspend the nation's debt limit through January 1, 2025, to avert a first-ever US default.
Has President Biden signed the debt ceiling? ›
WASHINGTON (AP) — With just two days to spare, President Joe Biden signed legislation on Saturday that lifts the nation's debt ceiling, averting an unprecedented default on the federal government's debt.