5 Ways the Coronavirus Might Hurt Your Social Security

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In uncertain times, you can still count on Social Security to provide the foundation for your retirement. Through thick and thin, our national retirement safety net is always there.

But that does not make Social Security immune to the ravages of the novel coronavirus. Following are some ways the pandemic potentially threatens your Social Security benefits.

It is tougher to get Social Security help

Prior to the coronavirus pandemic, you could easily waltz into your local Social Security Administration office and talk to someone who would answer any questions or concerns you have about the program.

But the coronavirus has suspended that luxury. Since mid-March, all local Social Security offices across the country have been closed for in-person service.

Fortunately, you still have options for getting assistance. To learn more, check out “5 Ways to Get Social Security Help While Offices Are Closed.”

Also, do not fear that closed offices will also mean suspended benefits. The Social Security Administration has clearly stated that payments will continue to be sent as usual.

Want assistance understanding your Social Security options — and the best strategies for maximizing your overall benefits? Stop by our Solutions Center to learn about low-cost help.

You might have to claim benefits earlier than expected

Many people plan to claim Social Security benefits as late as age 70. Waiting longer before filing for Social Security increases the size of your monthly benefit.

But these are difficult times. The stock market is down, reducing retirement portfolio balances nationwide. And some pre-retirees and semi-retirees likely are among the tens of millions of Americans who have lost their jobs in recent weeks.

Claiming Social Security earlier than planned is one way seniors can boost their income today. But doing so will mean smaller monthly Social Security checks tomorrow.

Your 2021 COLA might be lower

Each fall, Social Security benefits are adjusted — or left alone — based on the average change to the federal government’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) over the previous four quarters.

This change — known as a cost-of-living adjustment, or “COLA” — is intended to help benefits keep pace with inflation.

Most years, the COLA is adjusted higher, causing benefits to increase. For 2020, the COLA rose 1.6%.

However, if the CPI-W shows no average change over the previous four quarters, or if it falls, there is no Social Security COLA for the following year. This happened as recently as 2016, and it could happen again this coming October, since the coronavirus has stopped the economy in its tracks.

At the very least, the COLA for 2021 may be lower than it was for this year. Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, told CNBC the CPI-W is falling for one big reason:

“What’s going on in the first quarter is, primarily, gasoline prices plunged. That’s driving it down because the gasoline is weighted more heavily for the CPI-W and that drives down the COLA.”

The coronavirus could sicken Social Security itself

The health of the Social Security program depends on people working. Payroll taxes are used to pay retirees.

But with 26 million people having filed claims for unemployment insurance from mid-March through mid-April, the government is collecting less in payroll taxes.

Nancy Altman, president of the advocacy organization Social Security Works, told MarketWatch that she believes the coronavirus-related reduction in payroll tax receipts could bring depletion of the Social Security trust funds to reality a year or so earlier than current projections.

(The latest annual federal projections, released on April 22, show the trust funds for Social Security retirement benefits will be depleted in 2034, but those projections don’t account for the financial impacts of the coronavirus pandemic.)

Social Security scams could bite your wallet

The coronavirus pandemic has introduced another scourge: Social Security scams.

In March, the federal government warned that many Social Security recipients were getting letters telling them their benefit payments would be stopped unless they called a specific phone number.

It is believed that such scams aim to get personal information or payment from the targeted Social Security beneficiary.

For the record, the Social Security Administration says it will never:

  • “Threaten you with benefit suspension, arrest, or other legal action unless you pay a fine or fee;
  • Promise a benefit increase or other assistance in exchange for payment;
  • Require payment by retail gift card, cash, wire transfer, internet currency, or prepaid debit card;
  • Demand secrecy from you in handling a Social Security-related problem; or
  • Send official letters or reports containing personally identifiable information via email.”

If you receive any suspicious communication regarding your benefits, the Social Security Administration advises you to hang up or not respond. Then, report the scam by using the online form at the official Social Security website, SSA.gov.

The Federal Trade Commission offers more tips for avoiding a Social Security scam during the pandemic on its blog.

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