It is far too early to judge how severe the current recession will be or how long it will last. Instead of relying on a highly uncertain forecast of future economic damage, our methodology begins by estimating how Social Security’s trust funds would fare if the current downturn were roughly equivalent to the Great Recession. We then model more and less severe variants of the Great Recession to estimate a range of possible outcomes.

We estimate the effect of the Great Recession by comparing the Social Security trustees’ projections from 2008—the last official forecast that didn’t incorporate the Great Recession—to the trust funds’ actual income and costs over the ensuing years. To simulate a second Great Recession, we assume that over the next 10 years, Social Security revenue and excess costs from additional claims of retirement and disability benefits change as they did from 2008 through 2017.2 Since we measure the fall in total revenue, we capture the effect of lost payroll taxes, lost taxation of Social Security benefits, and lower interest income earned by the trust fund.

We make a few adjustments to these numbers to reflect current circumstances. First, we adjust the added cost from more older Americans claiming retirement benefits to account for the fact that the eligible population is larger today. Second, because the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act temporarily increased unemployment insurance payments by $600 per week and expanded eligibility, disability insurance claims may not rise by as much as they did during the last downturn. We therefore increase DI costs in 2020 by less than the amount implied by the Great Recession. Finally, the coronavirus will tragically end the lives of many seniors, who will therefore not receive (or stop receiving) Social Security benefits. We use estimates on how many older Americans will die from the virus and lower program costs accordingly.

Based on these assumptions, we estimate that another economic downturn with severity and impacts similar to the Great Recession would accelerate the depletion date of the OASI trust fund reserves from 2034 (projected in this year’s trustees’ report) to 2029, the depletion date of the DI trust fund reserves from 2065 to 2024, and the depletion date of the combined (OASDI) trust fund reserves from 2035 to 2029 (see Figure 1-3). We emphasize that these are preliminary estimates that will be revised in a forthcoming report. If trust fund reserves were depleted, benefits could be paid only from program revenues, triggering a cut of 31% in retirement benefits and 16% in disability benefits.3