The prospect of a federal government shutdown was looming while millions of people awaited Social Security payments, tax refunds and paychecks, but Congress avoided that outcome — at least for now.
The Senate voted Thursday afternoon on a stopgap measure to fund the government through Dec. 3. The bill passed in a 65-35 vote. The House of Representatives then passed it with 254 yes votes, as 34 Republicans voted with Democrats.
But keep this in mind as the government’s fiscal year ends on Thursday at midnight: any temporary lapse in funding for government operations would have not necessarily spelled a complete lights-out, power-off wholesale shutdown of operations.
The contingency plans that agencies have been drawing up indicate Social Security payments would continue during a shutdown, and so would tax return processing and tax refund payments.
But many federal workers, regardless of whether they were furloughed or still had to report to work, would have to wait until government operations fully resume to get paid, according to the largest union of federal employees.
“Congress did the right thing by passing legislation to keep the government funded through Dec. 3. Bringing federal agencies to the brink of a shutdown was, once again, a terrible waste of resources and caused unnecessary worry and distraction,” said Everett Kelley, national president for the American Federation of Government Employees, after Congress voted on Thursday.
Kelley added, “So many federal employees are working night and day to contain a global pandemic that has taken the lives of more than 675,000 Americans, and the idea that they might not have received a paycheck on payday is unconscionable.”
The bill now awaits President Joe Biden’s signature.
The most recent government shutdown grinded on for 35 days between late 2018 to early 2019, the longest on record. To be clear, a shutdown would have been much more than a minor inconvenience. But a more troubling date looms: Oct. 18.
That’s Treasury Secretary Janet Yellen’s estimate on when the department will exhaust its efforts to avoid a debt default if Congress has not yet raised or suspended the debt limit.
See also: Here’s how the stock market has performed in past government shutdowns
“We fully expect Congress to work in a bipartisan fashion to keep our government open, get disaster relief to the Americans who need it, and avoid a catastrophic default, especially as we continue to confront the pandemic and power an economic recovery,” said Abdullah Hasan, spokesman for the White House’s Office of Management and Budget, in a statement before the Thursday votes.
Still, he added, “prudent management” requires planning for any possible funding lapse. As a result, the office is “preparing for any contingency, and determinations about specific programs are being actively reviewed by agencies. More importantly, there is enough time for Congress to prevent a lapse in appropriations, and we are confident they will do so.”
How a government shutdown would affect Social Security checks
The Social Security Administration (SSA)’s contingency plan says it will “continue activities critical to our direct-service operations and those needed to ensure accurate and timely payment of benefits.” But the agency would pause activities “not directly related to the accurate and timely payment of benefits or not critical to our direct-service operations.”
Contingency plans can be updated, but the SSA plan, dated Sept. 24, says operations still slated to continue are applications for benefits, address changes and the issuance of original and replacement Social Security cards. Roughly 54,000 workers of SSA’s approximately 63,000 staffers will be exempted from furlough, the document said.
Any shutdown “will have little, if any, impact on beneficiaries getting their checks,” said Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.
“The debt ceiling, if that’s not resolved, that could hurt you. The shutdown, that’s not going to hurt you,” he said.
Earlier this month, Yellen warned in a Wall Street Journal opinion piece that if Congress fails to raise the debt ceiling, approximately 50 million senior citizens “could stop receiving Social Security checks for a time.”
How a government shutdown would affect tax returns and tax refunds
The Internal Revenue Service is currently trying to dig out from a backlog of unprocessed returns and turn around refunds — and the imminent Oct. 15 filing deadline for people who received an extension means another pile of returns is on the way.
But “activities necessary for the payment of refunds” are one of the IRS duties that will continue, according to a Treasury Department document spelling out IRS operations during any shutdown.
Doing that entails tasks such as processing electronic returns, paper returns and amended returns, the same document noted. It also includes clerical support and “document preparation, screening and control of work,” the plan says. Nevertheless, the IRS would have to carry this out with about 60% of its more than 82,000 employees furloughed, the document shows.
And IRS workers still have to sift through a stack of 10 million unprocessed paper returns for individuals and businesses, according to the tax collection agency’s Taxpayer Advocate Service.
There are 5.7 million returns that need more information, and the IRS is anticipating receiving 4 million additional returns before the Oct. 15 deadline, National Taxpayer Advocate Erin Collins said in a blog post. Separately, the IRS said it has 7.8 million unprocessed individual returns as of Sep. 18.
The IRS has been behind the eight ball since it had to temporarily close offices during the pandemic’s early months, distribute stimulus checks and also adjust for new tax rules from Congress in the course of this tax season.
Processing tax returns are considered protection of government property, a key function that continues in a shutdown, according to Nina Olson, the former National Taxpayer Advocate.
But if a smaller staff is working, the people who are still waiting for refunds can expect to wait even longer. “It’s a disruption of the normal course of business,” said Olson, who saw the havoc created by the past shutdown — including unanswered inquiries from people needing the IRS to lift tax liens for real estate closings to go through.
How would a government shutdown affect federal workers’ paychecks?
Many federal workers will keep coming into work despite any shutdown — but that doesn’t mean they are going to get their paycheck at the same time.
“All federal employees who work for agencies that run out of funding [Thursday] night will not get paid as long as the shutdown lasts, whether they are required to report to work or are prevented from working,” said Tim Kauffman, a spokesman for American Federation of Government Employees, a federal workers union with more than 700,000 members, including custodial staff at the Department of Veterans Affairs and food service workers.
Though many agencies will run out of funding, some have their own revenue streams that don’t make them dependent on government appropriations, Kauffman said. The U.S. Postal Service is one example, he noted.
The 2019 Government Employee Fair Treatment Act passed after the last shutdown authorized backpay for that shutdown. It also ensures backpay in the wake of any future shutdowns. Workers have to be paid “on the earliest date possible after the lapse ends, regardless of scheduled pay dates,” according to a summary of the law.
But that’s little comfort to workers who have to pay their bills now, Kauffman said.
In a statement before the votes, Everett Kelley, the AFGE national president, said the five weeks without a paycheck during the last shutdown forced some federal workers to skip bills or groceries.
On Thursday, Kelley said the stopgap measure bought just a little bit of breathing room. “This short-term reprieve must be used to pass full-year appropriations bills and keep the government from defaulting on its debts,” he said.
This story was updated on Sept. 30, 2021.
FAQs
Would I get my Social Security check if the government shuts down? How a shutdown would affect Social Security, tax refunds and federal paychecks? ›
Will I continue to receive my Social Security and SSI checks? During a
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.
Will government shutdown affect retirement pay? ›Q: I'm a Federal retiree. Will I still receive my monthly annuity payment during a government shutdown? A: Yes.
Which president took money from Social Security? ›Which political party started taxing Social Security annuities? A3. The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.
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 checks end? ›The age increases annually by two months from 1955 to 1959 until it reaches 67 for those born in 1960 and later. 6 Once you start receiving benefits, they continue for your lifetime.
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.
What happens if the government shuts down? ›When there is a government shutdown, federal agencies are required to classify their employees as either "essential" or "non-essential." The employees classified as "essential" continue to work during the shutdown. However, the employees classified as "non-essential" are put on unpaid furlough.
What happens when your retirement money runs out? ›If you run out of money in retirement, you will need a way to make extra money. The best way to do that may be to get a job. That can be a tough decision to make if you've been retired for several years. But without a job or any sort of income, there will likely be no way to cover all monthly expenses.
What day of the month do federal retirees get paid? ›Retired and annuitant pay is due on the first of the month. However, if the first falls on a weekend or holiday, retirees get paid on last business day of the prior month and annuitants get paid on the first business day of month. For example, payment to retirees for December 2023 will be paid on December 29, 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.
Is there a bill in Congress to stop taxing Social Security? ›4453 - 117th Congress (2021-2022): No Tax on Social Security Act of 2021 | Congress.gov | Library of Congress.
Has Congress ever taken money from the Social Security fund? ›The belief among some folks is that Congress has stolen trillions of dollars from Social Security, and that if this money were simply returned to the program, it wouldn't be in such dire financial shape. But the real surprise, upon digging deeper, is that Congress hasn't stolen a dime from Social Security.
How much will the SSI checks be in 2023? ›SSI benefits increased in 2023 because there was an increase in the Consumer Price Index from the third quarter of 2021 to the third quarter of 2022. Effective January 1, 2023 the Federal benefit rate is $914 for an individual and $1,371 for a couple.
What is the most back pay for Social Security? ›The maximum SSDI will provide in back payments is 12 months. Your disability would have to start 12 months before you applied to receive the maximum in SSDI benefits.
What will replace Social Security? ›In the proposals presented to the Commission, the use of retirement bonds--and annuities based on bond accumulations- would also replace the entire benefit structure of Social Security for the future.
Will Social Security get a raise in 2023? ›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.
What is the increase for 2024 Social Security? ›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.
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.
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.
Do I have to pay taxes if the government shuts down? ›
If the federal government shuts down, IRS operations will be severely limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.
What does a government shutdown mean for US citizens? ›Shutdowns cause the disruption of government services and programs, including the closure of national parks and institutions (in particular, due to shortages of federal employees).
What happens if government 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.
Can you live on Social Security only? ›Living on Social Security alone is not only possible, but many retirees already accomplish that very feat every year. While the lifestyle associated with Social Security income isn't exactly luxurious, it doesn't have to equal rice and beans for the rest of your life, either.
How many people have $3,000,000 in savings? ›1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.
What happens if you retire and have no money? ›Without savings, it will be difficult to maintain in retirement the same lifestyle that you had in your working years. You may need to make adjustments such as moving into a smaller home or apartment; forgoing extras such as cable television, an iPhone, or a gym membership; or driving a less expensive car.
What is the pay raise for federal retirees in 2023? ›Register today! For example, the 2023 COLA was 8.7% — the highest percentage increase since 1982. But FERS retirees saw only a 7.7% COLA. Cost-of-living adjustments are designed to keep federal and military retirees and Social Security recipients, on par with inflation.
Does money in the bank affect Social Security retirement benefits? ›Social Security does not count pension payments, annuities, or the interest or dividends from your savings and investments as earnings. They do not lower your Social Security retirement benefits.
How long after you retire do you get your first check? ›If you set benefits to begin at full retirement age (FRA) — 66 and 4 months for people born in 1956, 66 and 6 months for those born in 1957 and gradually rising to 67 for people born in 1960 and later — your first payment generally will arrive in the month after you attain that age.
How do I get the $16000 Social Security bonus? ›- Option 1: Increase Your Earnings. Social Security benefits are based on your earnings. ...
- Option 2: Wait Until Age 70 to Claim Social Security Benefits. ...
- Option 3: Be Strategic With Spousal Benefits. ...
- Option 4: Make the Most of COLA Increases.
What is the 10 year rule for Social Security? ›
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.
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.
What did Ronald Reagan do to Social Security? ›In 1981, Reagan ordered the Social Security Administration (SSA) to tighten up enforcement of the Disability Amendments Act of 1980 created by then President Jimmy Carter https://www.ssa.gov/policy/docs/ssb/v44n4/v44n4p14.pdf , which resulted in more than a million disability beneficiaries having their benefits stopped ...
Which state do not tax Social Security? ›Alaska and New Hampshire are the only states with no sales, income or Social Security tax.
How much Social Security will I get if I make $25000 a year? ›What is the Social Security payment for a salary over 25,000 dollars? For people who are earning 25,000 dollars across the year rather than the previously mentioned amount, 1,880 dollars of the benefits would have to be withheld, so the monthly benefit amount is 1,886 dollars.
How much money is left in the Social Security fund? ›| 2022 report | 2023 report | |
|---|---|---|
| Trust fund reserves | ||
| Amount at beginning of report year (in billions) | $2,852 | $2,830 |
| Amount at beginning of report year (as a percentage of report year outgo) | 230% | 204% |
| Projected year of peak trust fund reserves c | 2022 | 2023 |
The brief's key findings are: An unconventional strategy allows individuals to use early Social Security benefits like a “free loan,” paying back the principal while keeping the interest.
Why is Social Security 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 state pays the most in Social Security? ›- Total Social Security Received: $9.34 billion.
- Total Number of Recipients: 6,166,205.
- Total Social Security Received: $162.82 million.
- Total Number of Recipients: 110,006.
Are people on SSI getting a stimulus check in 2023? ›
Although the federal government has not authorized stimulus payments, if you receive an SSI check 2023, you may be entitled to money from the state where you live.
What is highest monthly check from Social Security? ›- $2,572 for someone who files at 62.
- $3,627 for someone who files at full retirement age (66 and 4 months for people born in 1956, 66 and 6 months for people born in 1957).
Social Security Disability Insurance (SSDI) – The maximum payment is $3,627 a month. The maximum family benefit for SSDI is about 150% to 180% of the disabled worker's benefit. The maximum payment at full retirement age is $3,627 monthly. However, if you retire at age 62, your benefit is $2,572.
What is the highest amount Social Security pays per month? ›- Your work history and filing age will determine how much Social Security income you get.
- Most seniors don't qualify for a $4,555 monthly benefit, so don't stress if you can't score the max.
- Motley Fool Issues Rare “All In” Buy Alert.
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.
Will Social Security benefits be gone? ›Social Security is now expected to run short of cash by 2033 Policymakers will need to patch the Social Security program by 2033 to avoid draconian cuts in benefits, a year earlier than had been predicted. A trust fund for Medicare will run out of cash by 2031.
Which president dipped into Social Security? ›The Social Security Act was signed into law by President Roosevelt on August 14, 1935. In addition to several provisions for general welfare, the new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement.
Is the federal government going to increase Social Security benefits? ›Approximately 70 million Americans will see a 8.7% increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2023.
Is Social Security getting a raise again? ›Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 8.7 percent in 2023. Read more about the Social Security Cost-of-Living adjustment for 2023. The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200.
Will there be a Social Security raise? ›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 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.
Will there be an increase in Social Security benefits in 2023? ›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 much will SSI check be in 2023? ›Generally, the maximum Federal SSI benefit amount changes yearly. SSI benefits increased in 2023 because there was an increase in the Consumer Price Index from the third quarter of 2021 to the third quarter of 2022. Effective January 1, 2023 the Federal benefit rate is $914 for an individual and $1,371 for a couple.
Will senior citizens get a stimulus check this month? ›Yes. The CARES Act included direct payments to most Americans, including Social Security recipients. As long as your adjusted gross income (AGI) is $75,000 or less ($150,000 or less for married couples), you should be eligible for a $1,200 stimulus check.
How much will the raise be for Social Security next year? ›The latest COLA is 8.7 percent for Social Security benefits and SSI payments. Social Security benefits will increase by 8.7 percent beginning with the December 2022 benefits, which are payable in January 2023.
What will 2024 Social Security increase be? ›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.
What is the cost-of-living increase for 2023? ›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.
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.
Who owns the most U.S. debt? ›According to usafacts.org, as of January 2023, Japan owned $1.1 trillion in US Treasuries, making it the largest foreign holder of the national debt. The second-largest holder is China, which owned $859 billion of US debt.
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 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%