How Will COVID-19 Affect the Social Security Trust Funds?

An economic downturn can dramatically impact Social Security’s short-run finances, accelerating depletion of reserves in the program’s trust funds. In this issue brief, we run four stress tests to illustrate how the retirement and disability trust funds would fare under several possible versions of the current recession. Before the pandemic, Social Security’s Trustees projected that reserves in the retirement trust fund would be depleted in 2034. In each of the scenarios we model, that date moves at least one year closer— arriving between 2029 and 2033. Meanwhile, the Trustees had projected that the disability trust fund’s reserves would be depleted in 2065. In each of our scenarios, disability reserves are depleted at least 10 years sooner—as early as 2023 and 2024 in our two more-pessimistic scenarios and as late as 2054 in our mildest one. The timing of trust fund depletion will ultimately depend on the depth and duration of this recession’s toll on the labor market, which remains uncertain.