How did Social Security fare during the pandemic recession? A severe economic slowdown, coupled with lowered worker productivity, elevated mortality rates, decreased immigration and lowered birth rates, did affect payroll tax revenue. The payroll tax is the primary source of income to the Social Security system. A faster than predicted economic recovery however, with a record number of new businesses, helped bolster the system more than expected.
What does this mean? A Social Security trustee report released in August notes that benefits are expected to exceed income in 2021, the same as trustee estimates in a report dated April 2020, with the trust fund being fully depleted by 2034, one year sooner than anticipated.
The predictions may not sound good, but take note. The latest report was analyzed a full year into the pandemic. The new numbers are very similar to estimates released during the pandemic, April 2020, but which were prepared before the onset of the pandemic. The trustees noted in the April report that “the actual status of the program in the near term is almost certainly somewhat less favorable”; in other words, the trustees thought the pandemic was “almost certainly” going to affect Social Security in the short-term. In fact, the actual status of the program stayed about the same.
This does not mean that the longer-term issues to the system have somehow disappeared. Serious long-term issues to the Social Security system remain, but it is important to recognize that things fared relatively well for the program during these unprecedented times.
Acknowledging a small victory when we can. ~ Brian Kasal- The Leadership Matrix
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