How Covid-19 is killing Social Security

Amidst the Coronavirus pandemic, many government agencies are still running and trying to provide help and relief to its citizens. One of the largest and oldest agencies running, the Social Security Administration (SSA), is still providing financial aid. However, people are concerned with how much longer Social Security will be able to last in its given form. This Wednesday, the Social Security Board of Trustees released a report that detailed the current state of the SSA. One of the notable pieces of data was that Social Security will likely only last until 2035. While this is consistent with last year's previous estimate of the longevity of Social Security, it fails to take into account the recent effects of Covid-19.

Social Security is a buy-in program where, “workers pay Social Security taxes into the program and money flows back out as monthly income to beneficiaries”(National Academy of Social Insurance). This tax however is calculated based on a person's earnings. The problem with this is that the recent stay at home orders and closure of nonessential businesses has created mass employment across the nation. While Social Security will continue to give out their monthly benefits, expending their money, they won’t be earning as much from taxes as they won’t be able to tax as many people's earnings.

Social Security has seen the effects of an economic downturn affect longevity. From the 2008 financial crisis, Social Security had an expected lifetime of 33 years, but after another estimate in 2012, the lifetime was down to 21 years. During that time, the SSA saw, “the claims for Social Security Disability Insurance could rise and more older workers could also retire and begin to claim benefits”(Yahoo Finance). We could see a sharp decrease in the expected lifetime of the Social Security program if changes aren’t made. With less money flowing in, and most likely more people applying to get Social Security payments, the program could soon collapse.

Sources:
https://www.washingtonpost.com/opinions/2020/04/23/covid-19-threatens-yet-another-victim-social-security/
https://www.nasi.org/learn/socialsecurity/who-pays
https://www.ssa.gov/coronavirus/
https://finance.yahoo.com/news/coronavirus-could-deplete-social-security-as-early-as-this-decade-analysis-220347671.html