(Washington, DC) – An emergency Social Security and Medicare payroll tax cut could weaken program financing at the same time a Coronavirus caused recession would significantly increase the number of people claiming Social Security, warns The Senior Citizens League (TSCL). “Although many older adults today are putting off claiming benefits to allow their Social Security payouts to grow, they are unlikely to be able to afford to wait if they lose their jobs, or when the value of retirement account investments are significantly impacted,” says Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League.
“Social Security and Medicare need to be adequately financed if a recession would occur,” Johnson says. “When unemployment is high, there’s less payroll taxes flowing into Social Security and Medicare,” she notes. “Providing a complete payroll tax break to stimulate the economy would only exacerbate financing issues and would be unlikely to make a big enough emergency impact when needed, especially for people who aren’t working,” Johnson points out.
For retirees with a 401(k) or retirement savings, a recession would make those lucky enough to have savings more dependent on Social Security, because big changes in equity prices reduce the distributions from those accounts perhaps for several years.
To make matters worse older Americans are at the highest health risk from the coronavirus. “Congress needs to ensure that any big emergency financial stimulus to address a coronavirus - caused economic recession, doesn’t put Social Security and Medicare benefits at risk as well,” says Johnson.
Safeguarding the health of Americans is of primary importance now. The Senior Citizens League is working for legislation that would help strengthen and boost Social Security and lower out-of-pocket Medicare costs. To learn more, visit www.SeniorsLeague.org.
With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors’ groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.
Note to Journalists:
The 2013 issue brief “How Did the Great Recession Affect Social Security Claiming?” by Richard W. Johnson, Karen E. Smith, and Owen Haaga of the Urban Institute provides helpful research on Social Security claiming behavior by the retiring and disabled adults during the Great Recession.