The Effects of the Covid-19 Pandemic on the Fiscal Health of Social Security’s Retirement Fund

Abstract

In this research, I explore the effects the Covid-19 pandemic had on the fiscal health of Social Security’s retirement fund. When welfare programs were originally designed, they were meant for a limited number of people who lived for very little time after their retirement. Recently, welfare programs have been expanding to encapsulate tens of millions of recipients, many of whom receive pensions for 20+ years. These increasing costs, coupled with decreasing income due to inflation, are causing immense fiscal pressure on the Social Security Administration. However, COVID-19 had an immense impact on the fiscal flows of the Administration, as it cut lots of revenue through the recession, though it cut costs through the number of deaths as well. To quantify the financial impact of COVID-19, I compiled three figures. First, I display the savings over time from COVID-19 deaths from 2020-2038 (figure 1) to exemplify the longevity of the impact COVID-19 had on the Administration. Next, I examine the age group’s contribution to the Administration’s overall savings (figure 2), which gives insight into why a certain demographic affected savings more than another. Finally, I look at a comparison between a pre-covid trustee report from 2019 and a post-covid trustee report from 2022 (figure 3), and I discuss the difference in projected benefits from 2023-2028. By comparing these two reports, I cover any past limitations with Figure 1, as well as showcase the decrease in revenue due to the pandemic. I found that the COVID-19 pandemic served to hurt the Social Security Administration more than it helped them since the costs from the pandemic outweighed the savings from the increased number of deaths.