The federal government appears to be on the verge of shutting down. If the U.S. Congress doesn't authorize additional spending, we could soon experience the 22nd government shutdown in the last 50 years.
It's understandable that retirees who depend on Social Security might be concerned. Don't worry, though: Social Security benefits won't be impacted by a potential government shutdown. However, retirees could be affected in other ways.
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Benefit payments won't be interrupted
Importantly, Congress does not have to do anything for Social Security benefits to be funded. The two Social Security trust funds still have money (even though they're on track to be depleted in the future.) Retirement benefits are also funded by ongoing payroll taxes.
But what about the possibility that workers in the Social Security Administration (SSA) who process benefits payments could be sent home during a government shutdown? That's not going to happen, either.
Last month, SSA sent a letter to the Office of Management and Budget (OMB) detailing its plans in the event of a government shutdown. The agency stated unequivocally, "We will continue activities critical to our direct-service operations and those needed to ensure accurate and timely payment of benefits."
Those activities don't just apply to benefits that are already being paid out. SSA will continue to process new applications for benefits. It will continue to handle requests for appeals related to benefits issues. New and replacement Social Security cards will also be sent even if the government shuts down.
Some areas that could be affected
So will everything about Social Security be business as usual? Not entirely. SSA does plan to furlough more than 8,500 employees (out of a total of nearly 62,000) in the event of a federal government shutdown.
With some of its workers not in the office, SSA won't be able to perform all of its normal duties. The agency identified the following services that would be paused if a shutdown occurs:
- Benefit verification
- Earnings record corrections and updates
- Payee accountings
- Prisoner activities -- suspension of benefits
- Requests from third parties for queries
- Freedom of Information Act (FOIA) requests
- IT enhancement activities, public relations, and training
- Replacement Medicare cards
- Overpayments processing
The good news is that most of these paused services won't cause problems for most retirees. However, some retirees could be affected. For example, if you lose your Medicare card, you could be out of luck if the government shuts down. It would be wise to make a copy of your card now just in case. It's also possible that some banks that rely on SSA benefits verification could delay the processing of loan applications for retirees in some cases.
What if a government shutdown lasts for a long time?
SSA's plans discussed above are for a shutdown that lasts between one and five days. However, it's possible that a shutdown could last a much longer time. For example, the most recent federal government shutdown began in December 2018 and went on for 35 days into January 2019.
If a shutdown goes on longer than five days, SSA stated in its letter to OMB that it would reevaluate how many employees were needed for critical functions and could furlough additional employees. The agency did just that during the federal government shutdown of 2013, which lasted for 17 days.
Regardless of how long a potential government shutdown might last, however, retirees' Social Security benefits will continue to be paid.
