Justin Fox: Why so many people signed up for social security this year

Remember when Elon Musk and President Donald Trump were saying that tens of millions of dead people received Social Security benefits?

It was pretty clear from the outset that this claim, which implied that the Social Security Administration could save hundreds of billions of dollars a year just by removing the deceased from its rolls, was false.

As Social Security’s Office of the Inspector General had detailed in a series of reports over the previous decade, tens of millions of centenarians are not marked as dead in Social Security’s Numident file of everyone who has ever been issued a Social Security number — mostly because they died before the current automated death-reporting system was installed — but the number receiving benefits was, as of 2020, a perfectly reasonable 44,000, about half the estimated number of people that old in the U.S.

Lee Dudek, the midlevel Social Security employee elevated to acting commissioner by Musk’s Department of Government Efficiency, acknowledged as much in March. But he also said the agency was making “significant progress in identifying and correcting beneficiary records of people 100 years old or older,” encouraging hopes that the death patrol might still have a noticeable effect on Social Security rolls.

Well I just looked and couldn’t see any effect. Instead, the number of retired-worker Social Security beneficiaries 99 and older rose 2,745 from mid-2024 to mid-2025, the biggest such gain in five years. More noteworthy, the total number of Social Security Old-Age and Survivors Insurance program beneficiaries — mostly retired workers but also their spouses, dependents and survivors — is up 1.7 million from January through August, more than its full-year gain in 2024.

This year’s sudden acceleration in beneficiary growth is even more striking when you look at percentage changes.

The decline after March 2020 was due to COVID-19, which over the past five years or so has killed 848,503 Americans ages 62 (the youngest age one can claim Social Security retirement benefits) and older, according to the Centers for Disease Control and Prevention. I mention this because it shows what the impact of removing hundreds of thousands of people from the Social Security rolls looks like. A study this year by four economists found that premature deaths caused by the pandemic saved Social Security $156 billion.

This year’s rise in beneficiaries is driven not by a sudden decline in mortality but by a 12% increase in new Old-Age and Survivors Insurance beneficiary awards. Average benefits paid are also up, by 4.5%, and the resulting increase in Social Security outlays is a main reason that federal spending is up nearly 9% since Trump took office despite canceled grants and programs, layoffs and a government shutdown. Far from discovering and correcting massive waste at Social Security, Musk has left behind and Trump has continued to preside over big spending increases.

That’s ironic. It would be even more ironic if this year’s increase in Social Security claims were Musk and Trump’s fault, and there is a theory going around to that effect. After looking into the numbers, my sense is that bipartisan legislation signed into law by President Joe Biden on Jan. 5 and widely condemned by retirement-policy experts as “terrible” has been a much bigger driver of the increased claims.

The Trump-and-Musk-are-to-blame theory is that the chaos surrounding Musk’s temporary Social Security takeover, coupled with general unease about the future of the program, has led Americans to rush to file for benefits this year while there are still some to be had. There is some evidence for this: In a June AARP poll, 12% of the 50-and-older respondents said that in the past year they had “considered claiming or decided to claim” benefits earlier than previously planned, with many citing concerns about Social Security’s viability and its Musk-exacerbated customer-service problems.

“Earlier than planned” is hard to capture in the Social Security statistics, but we can look at the number of people and share of the population claiming retirement benefits at 62, 63 and 64. It’s definitely up, but (1) the increase so far is quite small and (2) the inflection point after years of declines seems to have come in 2023 or 2024, not this year.

More people claiming Social Security in their early 60s won’t have a negative long-term impact on the program’s finances because benefits are reduced with each year of claiming benefits before age 70. Those reduced benefits could be a problem for the early claimants, though, especially because in the past these have tended to be people of modest means who retired involuntarily because they couldn’t find a job or their work had become too physically demanding.

The recent increases in Social Security filings by 62-year-olds have been sharpest among those with high earnings, according to a Social Security Administration analysis from April (which was taken offline by the agency but has been preserved by the Wayback Machine), a trend that I don’t have a good explanation for although the numbers of people involved are probably so small that maybe I don’t need one.

According to that same April analysis, the biggest recent percentage increases in new Social Security claims have been among people 71 and older with low Social Security earnings. That’s where the new Biden-signed law with the Orwellian name Social Security Fairness Act comes in. For a full explanation of what’s unfair about it I refer you to this piece by Andrew Biggs of the American Enterprise Institute; in short it’s a repeal of earlier laws that tried to equalize overall retirement payouts between (1) those who worked primarily in state and local government jobs not covered by Social Security but also had some Social Security earnings, and (2) those who had only Social Security earnings.

Now a few million former state and local government workers and their spouses and widow(er)s will receive bigger retirement payouts than people with identical earnings that were covered entirely by Social Security, with the resulting increase in benefits the main reason the trustees of the Old-Age and Survivors Insurance and Disability Insurance trust funds this year moved up the date when the funds are expected to run out and Social Security beneficiaries start receiving reduced payments from 2035 to 2034. Great work, everybody!

Most of the beneficiaries of this windfall were already receiving Social Security and are now simply receiving higher monthly payouts. Because the law was retroactive to 2024, they also received one-time retroactive payments that, as my Bloomberg Opinion colleague Jonathan Levin wrote in May, helped explain a lot of the US economy’s resilience over what might otherwise have been a difficult spring. But there were also Fairness Act beneficiaries who now for the first time had reason to apply for Social Security, a condition most prevalent among spouses and widow(er)s of former state and local government workers.

As of mid-April, the Social Security Administration was reporting (in the already cited Wayback Machine document) that it had processed 156,528 new claims related to the Social Security Fairness Act. My request for updated numbers has so far gone unanswered (the government is shut down, after all), but assuming that the claims kept coming in at a steadily slowing pace through the end of August got me to an estimate of nearly 325,000, or about three quarters of the overall increase in new Old-Age and Survivors Insurance benefits awarded through August compared with the period a year earlier. More-timely data on retirement insurance applications through September shows that since May they’ve subsided to levels similar to last year and 2023.

This year’s new-claims pattern seems pretty consistent with a rush of people claiming newly available benefits after they became available in early January, and the effect fading over time. It’s also somewhat consistent with a story in which former Fiserv Inc. Chief Executive Officer Frank Bisignano’s swearing in as Social Security commissioner on May 7, and Musk’s departure from Washington on May 28, gave way to a period of relative calm at the agency that left Americans less panicked about their retirement benefits. Both can be true. But the first explanation has a lot more data to back it up.

_____

This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts. A former editorial director of the Harvard Business Review, he is author of “The Myth of the Rational Market.”

_____