One of the biggest concerns Americans have about the government shutdown is whether it will affect their Social Security benefits. With millions of retirees relying on that income to make ends meet, any disruption in payments could have catastrophic impacts on their financial lives.
Fortunately, the shutdown won't stop Social Security payments from coming. But with other potential issues like the debt ceiling looming ever nearer, retirees and those nearing retirement need to understand everything going on with Social Security -- and explore alternatives to keep themselves afloat no matter what happens.
What's open and what's not
For the most part, many Social Security recipients won't even notice the limitations on services that the shutdown has caused. As the Social Security Administration's shutdown-notice website notes, Social Security and Supplemental Security Income payments will continue on their current schedule with no change in payment dates and no interruption in benefits.
Moreover, field offices will continue to provide many vital services. Most importantly, Social Security will still accept new applications for benefits, offering help for those who need it. In addition, changes in address or direct-deposit information, replacement of lost or missing payments, assistance with appeals, and acceptance of reports of death will still be processed at field offices.
More routine services, though, will be interrupted. If you need a new or replacement Social Security or Medicare card, you won't be able to get it during the shutdown. Similarly, Social Security won't be able to provide a proof of income letter for income-verification purposes. However, online services will remain available even during the shutdown.
The bigger threat
The shutdown is getting the lion's share of attention right now, but a bigger potential problem lies just ahead. The Treasury Department says it has taken its final emergency measures to keep the federal debt below the current ceiling level, anticipating that it will hit the limit in about two weeks.
It's unclear what would happen following a debt-ceiling breach. The Treasury could try to borrow irrespective of the cap, essentially violating the law that sets the ceiling. Alternatively, the government could choose not to make certain payments, prioritizing what it pays out to match regular funding inflows from tax revenue and other sources. Theoretically, that could create delays in payments to Social Security recipients, despite the immense political pressure to make sure that wouldn't happen.
You need a contingency plan
Unfortunately, for current retirees, it's hard to take steps to protect yourself from even the smallest possibility of a threat to your Social Security income. Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) earlier this year made it easier for retirees to get new mortgages or refinance existing mortgages, allowing them to include retirement-account balances as assets for loan eligibility under their lending programs. But recent changes to the government's reverse-mortgage program imposed new restrictions that could make it harder for retirees to use reverse mortgages to tap home equity.
For those who haven't retired yet, the easier solution is to bolster your own savings to make yourself less reliant on Social Security. Between company 401(k) plans that offer matching contributions as an incentive for you to save more and low-cost exchange-traded funds that make investing outside company plans simple and inexpensive, putting more aside for your retirement looks more attractive with every day that passes without a resolution to the government's issues.
Tune in to Fool.com for Dan's regular columns on retirement, investing, and personal finance. You can follow him on Twitter @DanCaplinger.