Are Social Security payments at risk if the US defaults on its debt?

Alarm bells are ringing in Washington. The United States recently hit its debt ceiling — the limit on how much money the federal government can borrow to pay all of its financial obligations, including Social Security and Medicare payments, military salaries, tax refunds, and more.

The Treasury has already begun taking “extraordinary measures” to ensure the country can continue making payments, although Treasury Secretary Janet Yellen has warned that it is difficult to estimate how long these measures will last.

If lawmakers can’t agree to raise the debt limit and increase the amount of money the US can borrow, the country risks defaulting on its debt — something that has never happened before.

According to experts, without an agreement in the currently divided Congress, insolvency could occur as early as this summer. Some are already sounding the alarm about potential disruptions to Social Security payments.

Here’s what you need to know.

Will Social Security payments stop if the US defaults on its debt?

First and foremost, Social Security recipients “get paid in full,” Donald Marron, director of economic policy initiatives at the Urban Institute, told Money.

The question is not whether social security benefits are paid at all, he adds. The question is whether these payments – which go to 66 million people each month – will be delayed or interrupted.

But Jason Fitchner, chief economist for the Bipartisan Policy Center, says even a delay is unlikely. “Social Security has sufficient revenue and assets to pay benefits,” he says, and the Treasury Department could access cash in other ways.

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If there’s a delay, Fitchner adds, it’s likely to be days, not weeks.

Social Security is already a hot topic in Washington – some within the Republican Party have proposed cuts to Social Security and Medicare as part of the debt ceiling negotiations – leading Marron to say “there would be a lot of pressure to to do that [Social Security] payments.”

He adds that while there’s certainly a “risk of delay” stemming from technical complications at Treasury Department, among other things, lawmakers are more likely to reach a last-minute deal to raise the debt ceiling, as they have often done have done before .

How would a US default affect you?

A disruption in Social Security payments would no doubt mean hardship for some. The average monthly Social Security check this year is $1,827, according to the Social Security Administration, and a delay in receiving that money could be disruptive for many of the country’s retirees.

“Even a brief delay in paying Social Security benefits would be a burden on the millions of Americans who rely on their earned benefits to pay for out-of-pocket health care, groceries, rent and utilities,” according to the National Committee Preserve Social Security and Medicare in a recent statement.

A failure could also mean delays in other government payments like SNAP benefits (aka food stamps) and federal employee salaries, as well as complications from disruptions and even closures at certain agencies, Fitchner says.

Not to mention the larger economic impact: “I would be concerned about the economic catastrophe that could result from a partial government shutdown,” Fitchner adds, like stock market losses and a possible recession.

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How should you prepare for a possible failure?

If you’re concerned about future cash flow, now is a good time to prioritize your emergency fund. Experts generally recommend holding expenses in a separate savings account for three to six months to cover unexpected financial stresses.

It’s also a good time to take a look at your investments and make sure your portfolio is in line with your risk tolerance. With a possible recession on the horizon, it’s also a good idea to keep a close eye on your budget, find places to cut back on spending, and prioritize paying off debt.

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