What the debt ceiling crisis could mean for social security benefits

What the new social security fund exhaustion dates mean for your benefits

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Treasury Secretary Janet Yellen grabbed headlines this week with an op-ed saying government checks could dry up if Congress doesn’t raise debt limits.

“Almost 50 million seniors could stop receiving Social Security checks for some time,” Yellen wrote.

The House of Representatives passed a bill to temporarily finance the government and suspend debt limits. However, this law could fail in the Senate. If MPs cannot come to an agreement, the government will shut down on October 1.

According to Nancy Altman, president of Social Security Works, Social Security recipients can breathe a sigh of relief when they learn that program funds will always be there to pay their checks, even if whatever happens with limit negotiations. indebtedness. Benefits of expansion.

However, it is possible that shutting down the government will delay the speed at which money gets to the people.

Social security funds are different

Social Security is “generic needle,” a legal term that means it is in and of itself, according to Altman.

“My reading of the law is that Social Security will not and should not be affected,” Altman said.

Social Security, created in 1935, never lacked benefits. Altman said one of the main reasons this won’t change anymore is because it’s a pension plan, with a pension trust separate from the government’s general operating fund.

“It really isolates it and makes it more secure,” she said.

According to the Social Security Administration, combined trust fund asset reserves used to pay retirement and disability benefits stood at $ 2.9 trillion at the end of 2020.

At the same time, 175 million workers paid social security contributions. Employees pay 6.2% of their salary, which is matched by employers, up to $ 142,800 in income by 2021. Self-employed people pay 12.4%.

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Altman said that even if the debt ceiling was not raised, payroll tax money would continue to flow into the government.

These contributions go into the program’s trust fund and are used to pay benefits.

Combined Social Security retirement and disability trust funds could continue to pay full benefits until 2034, according to a recently released report from Social Security Trustees for 2021. At this point, 78% of promised benefits will be payable.

“If the debt limit isn’t raised for a decade, which nobody thinks is going to happen, then there won’t be a problem,” Altman said.

the check may be delayed

However, if Congress is unable to come to an agreement in time to stop the government shutdown, the distribution of funds may be delayed.

As long as Social Security workers are considered essential government employees who remain in office, benefit controls will continue, Altman said.

During the 2018 shutdown, Social Security continued to issue checks.

However, the National Committee for the Preservation of Social Security and Medicare recently warned that the monitoring of benefits could be delayed by several weeks, or even more, if Congress fails to increase or suspend the limits. debt. East.

This is not the first time that there has been a debate on social security and debt ceilings. In 2011, then-President Barack Obama said Social Security benefit payments would stop during the shutdown. However, at the time, the Social Security Administration said the checks would still be issued, although there could be delays in processing claims for benefits.

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