A federal shake-up is rippling through the Social Security Administration (SSA), and the stakes are high. With over 66 million Americans receiving monthly benefits, even small disruptions can have vast effects. But the latest changes, led by the Department of Government Efficiency (DOGE), have prompted deeper fears — not just about operations, but about the future of the program itself.
Learn More: Social Security Benefits Might Be Harder To Qualify for in the Future: Here’s What You Need To Know
Try This: 4 Low-Risk Ways To Build Your Savings in 2025
DOGE’s restructuring efforts, led by Elon Musk, includes plans to cut thousands of jobs, close offices and overhaul legacy code. The question now is whether the system can absorb the pressure without ending up in a “death spiral,” as some SSA workers have predicted.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
Cuts, Closures and Code Confusion
The planned loss of 7,000 SSA jobs is already rattling internal operations. The union representing around 42,000 staff, the American Federation of Government Employees’ Social Security Administration general committee, expects more cuts are coming. Rich Couture, a spokesperson for the union, said there’s no safe office in the country.
“It’s a concerted attack on the legitimacy of Social Security itself,” he told The Guardian. “The promise that this country has made to the public with respect to income security is being broken.”
DOGE’s plan to rewrite code SSA code has added fuel to the fire. Employees say the new team doesn’t understand how the system works and that the accusations of illegal behavior were based on misunderstandings of decades-old code. If the tech infrastructure buckles, there could be widespread benefit delays.
Read Next: 4 Things To Watch for as Elon Musk Takes on Social Security
The Risk of Collapse Is Real
Economist Ayeh Bandeh-Ahmadi, former U.S. Treasury debt manager and founder of Volascope Labs, warned that policy shifts like this come with broader economic risks.
“We’re now seeing that risk unfold: 7,000 staff cuts, fragile legacy systems being rewritten and increased reliance on outside vendors,” she said. “If core operations become fragmented or confusing, families and local governments — already under pressure from inflation and underfunded services — will be among the first to feel the strain.”
She added that weakening Social Security could set the stage for changes like raising the retirement age, altering benefit formulas or implementing means testing — policies that “shrink the program’s reach and pave the way to dismantling it.”
And this didn’t necessarily start with DOGE. Bandeh-Ahmadi pointed out that although President Donald Trump campaigned in 2016 on a promise to protect Social Security, he later suggested eliminating the payroll tax that funds the program.
“While this move would result in higher take-home pay for workers, it would also severely underfund or eliminate the Social Security system, reducing the entitlements it can afford to pay out,” she said.
What’s at Stake Isn’t Just Retirement
Social Security taxes are structured differently than most. They’re directly tied to lifetime contributions, so they don’t distort work incentive. Undermining the system could shrink the economy and hit state and local budgets hard.
According to Bandeh-Ahmadi, the Penn Wharton Budget Model estimates that a balanced reform plan — one that gradually reduces benefits while raising taxes — could add over $2 trillion to the GDP by 2050.
“By contrast, allowing the system to erode could shrink GDP by a similar magnitude,” she said. “This is due to reduced retiree spending, increased poverty and added fiscal pressure on states and cities — ripple effects that can drag growth, strain trust, deepen inequality and reduce the tax base available to pay for government services or reduce national debt.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
-
5 Types of Vehicles Retirees Should Stay Away From Buying
-
6 Subtly Genius Moves All Wealthy People Make With Their Money
-
4 Things You Should Do if You Want To Retire Early
-
7 Wealth-Building Shortcuts Proven To Add $1K to Your Wallet This Month
Sources
-
The Guardian, “Doge’s attack on social security causing ‘complete, utter chaos’, staff says.”
-
Ayeh Bandeh-Ahmadi, Volascope Labs
This article originally appeared on GOBankingRates.com: Is Social Security Headed for a ‘Death Spiral’? Experts Weigh In
