Hearing the terms ‘government shutdown’ may send a lot of people into panic, because, what does this really mean and who will it impact? For Americans, one of their biggest concerns is their Social Security benefits. Fortunately, if you’re already receiving benefits, you will continue to receive your payments as normal. However, for those who are in the process of applying for benefits, this may take much longer.
This shutdown has created a divide: two very different experiences for Social Security recipients. Those already in the system are safe, while anyone trying to apply now could be frozen in place until things reopen.
Current Payments Are Safe
Social Security benefits are funded through payroll taxes and not directly from Congress’s yearly budget. This simply means that retirees, disabled workers and survivors who already receive benefits, can be rest assured that their benefits will arrive as normal.
This is important as there are millions, especially those on fixed incomes who rely on Social Security benefits to pay for housing, food and medical bills. Knowing that their money will be there, offers them peace of mind.
Where Things Get Stuck
Now this is where the problem comes in, for those who are not in the system yet. In simple terms, the shutdown does not stop the money from existing, but it basically stops the people who process the paperwork.
In other words, your claim for retirement benefits, disability benefits, or survivor benefits can be left pending until the government reopens. A long delay might even result from replacing a misplaced Social Security card.
The “Two-Tier” System
This creates what many are calling a two-tier system:
- Tier One: Current recipients. Their payments continue without any interruptions.
- Tier Two: New applicants. Their claims and paperwork stall until the shutdown ends and then face even more delays as the backlog clears.
The sad reality is that, this is not just inconvenient, because of this, some families may face unnecessary financial stress especially if they rely on Social Security.
Who Feels It the Most?
The impact is especially tough on people in transition:
- New retirees who planned their timing around starting Social Security now have to wait, sometimes without any backup income.
- Disabled workers applying for Social Security Disability Insurance (SSDI) may face long waits for benefits.
- Survivors of workers who have passed away such as widows, widowers, or children could be left without benefits especially when they need it the most.
What You Can Do If You’re Applying
If you’re in the group still waiting, there are a few things you can do:
- Apply online if possible. The Social Security website is still working, and submitting now gets you in line.
- Be sure to prepare for delays.
- Ensure that you have all of your Social Security documents ready so that you can apply as soon as the government reopens.
The Bigger Picture
These government shutdowns aren’t something new, it has happened before. The patterns are always similar, current Social Security recipients continue to receive their benefits while new applicants are faced with a delay.
It is therefore important to ensure that you have other savings apart from just Social Security, this will ensure that you bills are covered.
Bottom Line
Current retirees and beneficiaries do not need to stress as their benefits will arrive as normal. However, anyone trying to apply for benefits now, will unfortunately face a delay.
With that being said, it is important to plan ahead and make wise financial decisions to secure your financial future. Social Security is only meant to make up a portion of your retirement income. Looking into other savings might be a wise decision.
Be sure to keep updated with information relating to the shutdown so that you are aware of what is happening with your benefits.