The COVID-19 pandemic has been devastating for individuals and economies around the world. Gail Buckner, our personal retirement and financial planning strategist, shares her thoughts on how the pandemic has affected a key source of income for many elderly Americans—Social Security—and why it’s time to take action to shore up the program.
"The reports of my death are greatly exaggerated."
– Mark Twain
The same can be said about Social Security.
The COVID-19 pandemic has had a huge impact on virtually all aspects of our lives— family, work, school, religious worship, leisure, politics—you name it. No matter what topic comes up in [virtual] conversation these days, there is inevitably a “COVID-19” component. Social Security is no exception.
The question is, how big is that impact, and what are the ramifications?
Each year, the trustees who oversee this vast federal program are required to submit a detailed report to Congress on its long-term financial outlook. This is generally released between the beginning of April and the end of July. Last year’s report—which came out in early April—was prepared before the coronavirus outbreak was identified and declared an “epidemic.” As a result, the 2020 report did not take into account the impact of COVID-19 on Social Security’s finances.
Clearly, a lot has happened in the past year. As the virus spread rapidly, deaths—particularly among the elderly—soared. Schools, restaurants, shopping malls, beaches, movie theaters, sporting events—virtually all venues where we typically interact with others—were declared off-limits. Millions of Americans were laid off as the economy contracted and businesses cut back or closed. An additional 700,000 voluntarily quit because they were afraid they might contract COVID-19 on the job. In April, the unemployment rate hit 14.8%—the highest rate since the Great Depression 85 years ago, when the US saw an estimated unemployment rate of 25%1