Opponents of Social Security are latching onto the worldwide pandemic and resulting economic collapse to, at best, undermine confidence in Social Security and, at worst, slash its modest benefits. Here are the facts.
Despite fearmongering to the contrary, Social Security will continue to pay benefits in full and on time. Social Security has a reserve of $2.9 trillion, which provides more than enough cushion to ensure that benefits will continue without interruption, no matter how long the pandemic lasts. When looking at the long-term — the next three-quarters of a century and beyond — the pandemic will be absorbed, as the Great Recession was.
While benefits are secure, the unprecedented conditions of the COVID-19 economic crisis have unearthed a technical glitch. If left uncorrected, a COVID-19 notch will result: Those turning 60 this year – more than 4 million workers – and their families will receive substantially lower Social Security benefits than workers (and their families) with identical earnings who turned 60 last year.
Fortunately, the solution is easy and straightforward. But Congress must act.
Social Security’s earned benefits are based on each worker’s individual earnings history appropriately adjusted to reflect the growth in aggregate economy-wide wages. This structure is ingenious and fair, has numerous advantages, and works extremely well in almost all economic times. But these are not normal times.
Thanks to the pandemic and the economic collapse, aggregate wage levels are highly likely to decline substantially this year. Because this drastic decline in aggregate wage levels is so unusual, our Social Security system does not take that possibility into account. Congress must fix that understandable oversight to avoid the COVID-19 notch.Read Full Article