How Would a US Debt Default Affect Social Security?
Should the U.S. enter into a debt default, many government programs, including Social Security disability benefits, could be impacted.
Unfortunately for Social Security benefit recipients, U.S. debt default could indefinitely pause monthly payments. The threat of a U.S. debt default depends on whether or not Congress pays the country’s debt and raises the current debt ceiling. Should Social Security benefits be paused, millions of Americans could be affected, as many rely on monthly payments as their primary income source. Though trust funds are in place to support Social Security payments to recipients in the event of a debt default, they could be depleted if the United States enters into a debt default.
To get a free assessment of your case from Young, Marr, Mallis & Associates, call our Pennsylvania disability lawyers today at (215) 515-2954 or (609) 557-308.
How Could a US Debt Default Affect Social Security Payments?
When borrowers fail to meet payments, they could default on their debt. This can even happen to the United States government, which could, in turn, impact Social Security payments to recipients.
Certain Social Security programs could be affected if the U.S. enters into a debt default. Without the necessary funds to provide benefits to recipients, monthly payments could halt for an undetermined period of time, depending on the situation.
The U.S. has a debt ceiling that is set by Congress. The U.S. recently met its debt ceiling in January of 2023, meaning the possibility of it entering a debt default is impending unless Congress raises the debt ceiling. As of May 2023, the current issue preventing the debt ceiling from being raised and preventing the U.S. from paying certain outstanding debts revolves around Social Security. Some legislators in the United States wish for Social Security benefits to be reevaluated and possibly reduced, which could lower or eliminate certain Social Security benefits for some Americans. Social Security benefits, and the U.S. and global economies, could be greatly impacted should the United States enter into a debt default. This could mean that millions of people might lose their jobs as a result of a debt default, in addition to many losing Social Security benefits.
While it might seem as though the United States deals with a debt crisis on an annual basis, the threat to Social Security benefits is relatively high at the current time. It is important that Social Security benefit recipients confer with our Philadelphia disability lawyers to understand whether or not their benefits will be in jeopardy and learn how to prepare for a possible pause to monthly payments.
How Many Social Security Benefit Recipients Could Be Affected by a US Debt Default?
If the U.S. enters into a debt default and Social Security payments stop temporarily, millions of benefit recipients, including you, could be affected if they rely on Social Security payments to support themselves and their families.
According to the Social Security Administration’s (SSA) most recent data, over 9.2 million people in the United States received SSDI benefits in 2021. In December of that same year, payments equated to over $11.9 billion in total, which shows the sheer economic support Social Security benefits provide to disabled workers in America.
Social Security Disability Insurance benefits are not the only benefits available to Americans in need. Millions of people receive Supplemental Security Income (SSI) benefits, which are available to those with qualifying disabilities and demonstrate financial need. According to the SSA, 57% of people receiving SSI benefits in the U.S. have no other income, meaning a debt default could leave millions of SSI recipients without any financial support whatsoever.
Perhaps the largest portion of Social Security benefit recipients in the U.S. are retirees. When you reach retirement age, you can be eligible to receive retirement Social Security benefits to provide you with some income in the latter part of your life. Nearly 70 million people received Social Security benefits of some kind in 2019, so if the U.S. enters into debt default and halts Social Security payments, a large portion of the U.S. population could be seriously impacted.
What Protections Are in Place to Prevent a US Debt Default from Affecting Social Security Payments?
There are two Social Security trust funds in the U.S. that could enable benefit recipients to continue getting monthly payments for some time, despite a possible debt default in the United States. They are the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. That said, these trust funds might only be a temporary solution to a debt default.
Old-Age and Survivors Insurance Trust Fund
The OASI Trust Fund is a reserve that provides Social Security benefits to retirees and survivors of deceased workers in the United States. In 2022, the net reserves of the OASI Trust Fund decreased by millions of dollars, somewhat due to the ongoing crisis of COVID-19. At the end of 2022, the OASI Trust Fund’s asset reserves equated to about $2,711.899 billion. Considering the sheer number of retirement benefit recipients in the United States, the OASI Trust Fund might be depleted relatively quickly if a debt default occurs.
Disability Insurance Trust Fund
The Disability Insurance Trust Fund’s holdings are considerably lower than that of the OASI Trust Fund. While the DI Trust Fund’s asset reserves increased in 2022 by $18,594 million, the net asset reserves at the end of the year were about $118,000 million. While this can seem like a large amount of money dedicated to SSDI and SSI recipients, considering the fact that millions of people get these benefits every month, the DI Trust Fund might only be able to support disability benefit payments to Americans for a short time if the U.S. enters into a debt default.
Get Social Security Benefits Today
To have our Quakertown disability lawyers evaluate your case for free, call Young, Marr, Mallis & at (215) 515-2954 or (609) 557-308.