Social Security staff cuts could ‘significantly impact’ beneficiaries

Social Security has been considered untouchable politically for four decades. But the early days of President Donald Trump’s second term are revealing that nothing is off limits.

Plans to slash the Social Security Administration workforce from 57,000 to 50,000 might not directly involve benefits, but many stakeholders are nervous nonetheless.

The AARP, for one, is urging its members to call on Congress to protect the program that provides crucial financial support to 68 million retirees, the disabled and family members.

“We’ve been hearing from thousands of older Americans across the country who are concerned and confused about their Social Security — will their payments come on time? Can they get timely answers to their questions?” said Nancy LeaMond, chief advocacy and engagement officer for AARP.

With more than 38 million members the AARP is one of the largest membership organizations in the United States.

Last week, SSA employees were informed via email of an “agency-wide organizational restructuring that will include significant workforce reductions.” The agency is already at a 50-year staffing low, union leaders say.

SSA said employees may be reassigned from “non-mission critical positions to mission critical direct service positions” in field offices, teleservice centers, or processing centers.

Employees have until March 14 to decide among options that also include retirement or resignation. All employees at least 50 years of age with at least 20 years of service are being offered an “early out” voluntary early retirement. Employees may also take voluntary separation incentive payments of up to $25,000, depending on job classification.

Criticism from Democratic lawmakers came fast. Former SSA Commissioner Martin O’Malley was most vocal about the likely impact of the deep cuts.

“Ultimately, you’re going to see the system collapse and an interruption of benefits,” O’Malley told CNBC. “I believe you will see that within the next 30 to 90 days.”

‘It is time to change’

Lee Dudek, acting commissioner of Social Security, sought to calm fears of service interruptions or cuts to benefits.

“For too long, SSA has operated on autopilot,” Dudek said in a news release. “We have spent billions annually doing the same things the same way, leading to bureaucratic stagnation, inefficiency, and a lack of meaningful service improvements. It is time to change just that.”

The likely impact of the job cuts will be on customer service, said Chuck Czajka, certified Social Security claiming strategist and founder of Macro Money Concepts in Stuart, Fla.

It “could significantly impact the time it takes to claim benefits,” Czajka said. “It might also have an impact on in-person assistance that could cause delays in problem solving and claim processing. It can also create degradation in an already overburdened customer service staff.”

On the other hand, if the 7,000 positions cut are only “non-essential personnel, then it could fortify the SSA, allowing for a more balanced budget,” he added.

It will be the new applicants that likely feel the brunt of any service problems, said Chad Gammon, a certified financial planner and owner of Custom Fit Financial in Cedar Rapids, Iowa.

“If you are currently receiving Social Security then it should not have a delay,” Gammon said. “One way retirees can navigate longer processing times would be to use SSA's online system rather than regular mail.”

The Social Security trust fund faces bigger problems from a financial standpoint. Unless Congress acts, Social Security’s primary trust fund will be depleted in 2033, according to a 2024 report by the trustees. When that happens, each beneficiary will see their benefit cut immediately by 21%.

Study results

If carried out, the Trump administration’s SSA changes would be the most significant attempt to reform Social Security since the 1983 Greenspan Commission resulted in raising the retirement age from 65 to 67.

The Reagan administration’s Office of Personnel Management cut 17,000 employees from SSA between 1985 and 1990, about 21% of its total workforce. That effort was undertaken to slash federal spending.

Coincidentally, a new research paper by Sydney Gordon, a doctoral candidate at the University of California, Irvine, looks at the impact of those staffing reductions on SSA operations in the years and decades to follow.

Gordon concluded that every 10% decrease in field office employees in a particular county resulted in a 0.06% decrease in enrollment for traditional Social Security. Likewise, she found about 0.32% decrease in enrollment for Supplemental Security Income, aid to people with disabilities and older, poor adults.

“The downsizing translates to approximately 84 fewer beneficiaries per county, or 79,027 people nationally, who counterfactually would have enrolled by the end of this downsizing period,” Gordon wrote.

As it stands, the average time it takes to get a decision on an initial claim for disability benefits has more than doubled since 2016, AARP pointed out, from four to eight months, and callers to Social Security’s toll-free helpline have experienced waits averaging as long as 40 minutes to speak to a representative.

The organization noted that 2025 marks Social Security’s 90th birthday and called on lawmakers “to ensure that Social Security remains reliable and strong.”

“We want to work with Congress and the administration to get answers and address concerns,” LeaMond said. “We are also encouraging our members to contact their members of Congress and tell them that Social Security must be protected.”

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