Social Security & the Inevitable Recession: What They are Not Telling You

Added: 2026-05-17

[00:00:00]So, what happens to Social Security during a big nasty recession? That's actually a really good question and something we certainly need to take into consideration because Social Security is um definitely going to be impacted in a major way. And if you've been watching any of the headlines out there, there's been a lot of people, me included, suggesting we're likely going to see a big nasty recession at some point because all of the economic data that continues to come out is just not very supportive of a very strong robust economy. We've been teetering on the cliff of a major recession for quite a while. And we've been seeing a lot of the economic data being released suggesting that hey, it may not be all that far off. But again, we don't know exactly when it's going to hit. We're just kind of looking at some of the data out there. But I know that many of you out there in this community that watch these videos on social security may be wondering the same thing. Like, huh, is social security impacted? What happens to social security in the event of a recession? I can tell you this much.

[00:00:58]It's actually impacted in a very big way. Like way more than a lot of us would probably realize. maybe for reasons that we're maybe not anticipating, which is what I want to talk through for you in this video. Now, as always, before we get into it, please, if you have not done so, make sure to subscribe. Big subscribe button right down below. It's totally free.

[00:01:16]It'll cost you absolutely nothing. Also, make sure to hit the like button, the uh thumbs up button right down below. And by the end of this video, if you did not like the video or find it to be helpful, please make sure to go ahead and remove that like by the end. I certainly do not want something that I did not earn. And um I appreciate your support. And as always, if you're on Medicare or anything Medicare related, including your initial enrollment or anything along those lines, make sure to contact Chapter Medicare there. They can totally help you out completely 100% for free along with the other nearly 14,000 of you in this community that have already contacted them in the last year and a half or so. All right, anyway, thanks so much. Really appreciate you. Let's talk through a major recession, Social Security, and what does this actually mean? Now, when it comes down to your social security benefit checks, what's really nice is that your social security benefits are uh resilient. They actually do not get impacted by a recession uh at that given moment. Okay? So, when it comes down to your social security benefits, we could fall into the deepest darkest recession in the history of the United States and your Social Security benefits will continue to arrive on time in their full amount, no disruption.

[00:02:25]Amazing. Well, then how is Social Security impacted? Sounds to me like this program is completely resilient and has well no negative impacts in the event of a recession. Well, that's actually not totally true. And uh let me explain exactly why I'm saying that.

[00:02:42]Here is why. Remember this much. Social Security has three main sources of income. The biggest source by far without a shadow of a doubt is payroll taxes. Okay? Remember, on every dollar that is earned up to the maximum taxable earnings cap right now in 2026 is $184,500, every dollar that is earned is taxed at 12.4%.

[00:03:07]6.2% is paid by the employee, 6.2% is paid by the employer. Or if somebody is self-employed, they pay all of it.

[00:03:15]12.4%. In other words, 12 sorry, 12.4 4 cents out of every $1 that is earned goes to Social Security. Okay, that's trillions of dollars per year. It's actually, okay, let me say that again.

[00:03:28]It's not trillions of dollars. It's about a trillion half dollars a year that Social Security brings in through Social Security payroll taxes. In other words, when people are working and earning an income through their checks or distributions or whatever it happens to be, their money that comes to them, their income, that 12.4% tax is applied to every dollar. Okay? That money is coming into social security and ultimately what happens is the money comes into social security and it is paid out right away to the beneficiaries in the form of monthly benefits.

[00:04:03]Amazing. about a about a trillion and a half dollars a year is brought in through payroll taxes. The other sources of income that Social Security has are minor. They're very minimal compared to that huge one right there. But it's also taxation of Social Security benefits and also interest on the money in the trust fund. Those are very minimal between the two of them. They bring in about 120 billion a year, which is I mean, don't get me wrong, 120 billion to you and me is a ton of money. That'd be really fun.

[00:04:32]we'd have a really good life with $120 billion. Okay? But for for Social Security, that's only about one month's worth of benefit. The $120 billion that they bring in because of those other two sources. Okay? So, you can obviously see the bulk about a trillion and a half dollars that comes in through payroll taxes is by far without a shadow of a doubt the biggest source of income for Social Security. Now, here is how a major recession impacts Social Security, honestly, in a pretty negative way.

[00:05:02]Here's what it comes down to.

[00:05:03]Accompanying a recession is also massive unemployment. Okay, that is like one of the hallmarks of a major recession is spiking unemployment. Okay, so as of right now, unemployment is sitting right around call it 4.3% give or take a little bit. Okay, it's not high, it's not low, it's just kind of in the middle. It's in the middle. It's it's it's not bad. Okay, 4.3% give or take a little. It's it's oscillating all the time. But with a major recession, generally we see unemployment spike quite a bit. We could easily see unemployment go to 7 or 8 or 9 or 10% easily without that much effort. And here's the problem. If unemployment were to double from say 4.3% what it is right now to say 8.6% which would be doubling of the unemployment, that would be tens of millions of people additionally that would be unemployed. Well, guess what?

[00:05:59]What happens when we see millions and millions and millions more people unemployed? What are those millions of people not doing? Well, they're not doing a lot of things. Number one, they're not working. Number two, they're not bringing in an income. Number three, they're not paying in anything into social security uh trust fund through payroll taxes. That translates into billions and billions of dollars that is not going into social security through those payroll taxes and that means less money available to go out to beneficiaries. Does that mean does that make sense? Okay. So remember as of right now the social security trust fund give or take a little bit has about $2.5 trillion in it. Okay. that $2.5 trillion will be totally gone in about 5 1.5 to 6 years give or take a little bit early 2030s. So again 56 years um that money will be totally gone. $2.5 trillion vaporized in about 6 years. Okay, that money is going to be totally gone. But if we go into a big nasty recession, which to be fair with you, in the next 5 years, 6 years, we will certainly go into a big nasty recession. It's almost inevitable.

[00:07:14]It's almost unavoidable at this point because that's just the natural eb and flow of the economy. The natural eb and flow of business and economic cycles is that we go through major growth cycles and we go through stagnation and we also go through major recessionary periods.

[00:07:31]That's just how economies work. Okay?

[00:07:33]There's no way around it. But when we go into this and we have this massive spike in unemployment, that's a lot less money coming in to the trust fund that Social Security will have to pay out. In other words, what that means is that the drawing down of the trust fund significantly faster because they won't have the income coming in through payroll taxes to pay out to the beneficiaries. That means they need to dig a little deeper into the trust fund and they're going to draw those funds down even faster. In other words, bringing that insolveny date even closer to present time. Does that make sense?

[00:08:07]Okay, I know it sounds kind of weird, but that's the reality of the situation.

[00:08:11]And when we're this close to potential insolveny of Social Security, unfortunately, that's not a good very that's not a very good predicament to be in because the trust fund, even though it has nearly $2.5 trillion, seems like a ton of money. You're right. But it's all going to be gone in six years or less. Gone.

[00:08:31]two and a half trillion. Let me say this much. If you or me had two and a half trillion dollars, we could not spend that amount of money in six years. It would be practically impossible. You could buy everything you could ever possibly want and more and you could still have a lot of money left. It would be practically impossible to for any individual to spend $2.5 trillion in six years. I mean, you could literally buy entire countries with that amount of money. It'd be crazy. How cool would that be, right? I bought a country and I'm gonna call it whatever. I don't know. You could literally call you could literally buy countries. It's nuts how much money that is, right? But that's how much money is gonna be gone in just six years out of social security. So that is how a major recession and we're going to have one at some point. And again, that's not me being a pessimist and sitting here saying, "Oh, can't wait for the economy to go down." That's not what I'm saying. I'm simply saying this is just the natural cycle that we go through. Generally we go through a big nasty recession roughly every six or so years give or take a little bit look back in history in the last call it 25 26 years we've had three major recessions okay one of them was shortlived but one of them was the dot bubble bust in 2020 or sorry uh 2000 the year 2000 2001 remember y2k remember that good old that was interesting right but that was the dot bubble major nasty recession, 2008, 2009, the subprime uh boom and bust, right? The housing market went straight up and then went straight down and major foreclosures all across the board. And then we had 2020, right?

[00:10:09]The whole shutdown of the economy, massive unemployment, that was short-lived and they stimulated like crazy. So, that was relatively short-lived, but we're going to have another one at some point. There will certainly be another major recession at some point. when we don't know how nasty, we don't know, but it's going to happen at some point and we're going to see a major spike in uh unemployment and that'll also impact the finances of social security. So anyway, just want to point that out for you really quickly so we can all be on the same page here and understand what's going on. I'll certainly keep you posted along the way.

[00:10:42]As always, drop your comments, your questions, your feedback down below. And again, I said this earlier, but if you happen to be anyone on Medicare, if you need to enroll in Medicare, if your initial enrollment period is opening up for you, if you're turning 65, if you're retiring, first off, congratulations.

[00:10:56]That's amazing. That's very, very cool.

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[00:11:13]They're helping thousands of you in this community. They have access to over 20,000 plans. They will look through those those plans for you diligently to help you find the best plan for you and your personal needs and situation to uh to help you see your doctors, your providers, your prescribers. Make sure that you can still go to your offices, your clinics, your hospital systems, making sure that you have your prescriptions covered and whatever it else is that you need, your questions and concerns addressed and answered for you. They'll spend all the time that you need making sure that you are going through your initial enrollment properly, making sure that you're properly covered, helping you choose between original Medicare or Medicare Advantage, helping you find a supplement or metagap plan. Again, a lot of moving parts here, right? And again, they'll help you with all of this completely for free. Now, here's what's really awesome about this. In the nearly year and a half that um those of you in this community have been calling chapter again, nearly 14,000 of you have called that phone number right there to get free help with Medicare. Not only that, those of you in this community that have called them have saved nearly $3 million again by contacting that phone number there. $3 million nearly right back in the pockets of those of you in this community by making a fast and free phone call. That's cool. I love saving money, right? All right. Anyway, hope this helps you out. Again, as always, contact chapter regular business hours Monday through Friday. They could uh you'll connect with somebody relatively quickly on the phone. They can help you out and uh help you out start to finish and it's totally free. Amazing. All right. Anyway, please make sure to subscribe. Again, 100% free. It'll cost you absolutely nothing. Button right down below. Please share the video. Big share button down below. Check out the well well over 6,000 videos here on the channel in the video library. And make sure to like the video. Big thumbs up button right down below if you like the video and found it to be helpful. If you didn't, then by all means definitely do not like the video. I uh certainly do not want something that I did not earn.

[00:13:02]Thank you so much.