Personal Finance

Amid DOGE cuts, Elon Musk turns focus to Social Security beneficiaries over 100

Published

2 days ago

February 19, 2025

FILE PHOTO: Elon Musk speaks as his son X ? A-12 and U.S. President Donald Trump listen in the Oval Office of the White House in Washington, D.C., U.S., February 11, 2025.

Kevin Lamarque | Reuters

As Elon Musk continues to look for ways to cut federal spending through the Department of Government Efficiency, he has raised questions as to just how long some Social Security beneficiaries have been receiving payments.

With a “cursory examination” of Social Security, “we’ve got people in there that are 150 years old now,” Musk said during a Feb. 11 CNN interview.

In recent days, he re-upped those claims on social media platform X. “Maybe Twilight is real and there are a lot of vampires collecting Social Security,” Musk posted on Feb. 16.

Just because the Social Security Administration has millions of people in its database who are very elderly and not marked as deceased does not necessarily mean benefits are fraudulently being paid, said Alex Nowrasteh, vice president for economic and social policy studies at the Cato Institute, a public policy research organization.

“The amount of fraud is likely miniscule,” Nowrasteh said.

Top Social Security official exits after refusing DOGE access to sensitive data

When asked for comment, the White House provided an email statement from Press Secretary Karoline Leavitt citing a 2024 investigation that found the Social Security Administration made about $71.8 billion in improper payments out of almost $8.6 trillion in benefits paid from fiscal years 2015 to 2022.

Notably, deceased beneficiaries were one of multiple reasons that may prompt improper payments, according to the report from the Social Security Administration Office of the Inspector General.

“The Social Security Administration is now working to find even more waste, fraud and abuse in the Administration’s whole-of-government effort to protect American taxpayers,” Leavitt said in the emailed statement.

This week, acting Social Security commissioner Michelle King stepped down over reported concerns over DOGE access to sensitive data at the agency. In a new statement released Wednesday, Lee Dudek, who is now acting commissioner, said the agency plans to prioritize transparency and protect benefits and information.

“The reported data are people in our records with a Social Security number who do not have a date of death associated with their record,” Dudek said. “These individuals are not necessarily receiving benefits.”

The Social Security Administration did not respond to requests for further comment.

Data doesn’t influence benefit payments, expert says

In recent days, Musk has shared data on the numbers of Social Security beneficiaries by age on X. Experts say the data likely came from the Social Security Administration’s electronic file of personally identifiable information on everyone with a Social Security number, known formally as Numident.

Numident is an electronic file that has personally identifiable information — such as name, date of birth and other details — for every individual who has been issued a Social Security number, according to a 2023 Social Security Office of the Inspector General report focused on Social Security number holders ages 100 and up.

The Social Security Administration inputs death information it receives from various sources on Numident, according to the report. From there, the agency uses Numident to create a full file of death information, the Death Master File, that is shared with other agencies that pay benefits to help prevent and detect fraud.

In the 2023 report, the Office of the Inspector General found about 18.9 million Social Security number holders were born in 1920 or earlier and had no death information on their Numident records. However, Census Bureau data estimates at the time of the review showed only about 86,000 individuals living in the U.S. were age 100 or older.

If a death is not properly recorded, that can interfere with efforts to prevent and identify fraud by both federal and private entities, the OIG report said.

Just because Numident records are out of date doesn’t influence the Social Security Administration’s payments, according to a former Social Security Administration employee.

“The payment records that send 70 million checks payments a month aren’t driven by the Numident,” the former Social Security Administration employee said. “To correlate the two is just manipulative.”

For decades, the agency had reached out to beneficiaries who are over 100 years old, who have not recently used Medicare, to verify their identities, the former Social Security employee said.

“To say, ‘Oh, well, there’s 150-year-old people,’ that’s just silly,” the former Social Security Administration employee said. “That particular operation over the years did yield cases where there was fraud being committed, but not a lot of it.”

Undocumented immigrants pay into program

Individuals over age 100 are more susceptible to having their Social Security numbers fraudulently used by undocumented immigrants for work rather than having their benefits stolen, Nowrasteh said.

“A good number of these Social Security numbers are being used by illegal immigrants to work and pay taxes,” Nowrasteh said.

Importantly, that likely means more money coming into Social Security through payroll taxes than leaving the program through benefit payments, according to Nowrasteh.

In tax years 2016 to 2020, employers and individuals received about $8.5 billion in wages, tips and self-employment income from 139,211 Social Security numbers attributed to individuals ages 100 and up, according to the 2023 SSA OIG report that looked at number holders ages 100 and up.

“Probably zero of them are working,” Nowrasteh said of the data. Instead, that revenue into the program is likely coming from undocumented workers who won’t receive benefits, he said.

“Because they’re illegal immigrants, they don’t have access to the benefits on the back end when they retire,” Nowrasteh said.

Immigrants consumed 21% less welfare and entitlement benefits than native born Americans per capita, or per person, as of 2022, according to new research Nowrasteh co-authored.

If the administration cracks down on payroll taxes coming into Social Security using false numbers, “then it might actually worsen the fiscal soundness of the program and make it insolvent sooner,” Nowrasteh said.

The Social Security Administration relies on ongoing payroll taxes to pay benefits. To supplement those payments, the agency also draws from money set aside in trust funds. Because those trust funds are running low, just 83% of both retirement and disability benefits may be payable starting in 2035, Social Security’s trustees projected last year.

It remains to be seen whether Congress will act sooner to prevent those changes.

Personal Finance

How IRS layoffs could impact tax filings and refunds this season

Published

2 hours ago

February 21, 2025

Business Finance News

Vithun Khamsong | Moment | Getty Images

Thousands of IRS employees are expected to lose their jobs as Elon Musk’s Department of Government Efficiency, or DOGE, continues widespread cuts to federal spending.

The move comes roughly three weeks since the opening of tax season and could impact millions of taxpayers who will file before the April 15 deadline, experts say.

IRS funding has been targeted by Republican lawmakers since former President Joe Biden approved $80 billion for the agency via the Inflation Reduction Act, or IRA, in 2022.

The IRS layoffs have targeted probationary workers with less than one year of service — or longer in some cases. There were an estimated 15,000 probationary employees at the agency, many who were hired via IRA funds, according to a lawsuit filed by the National Treasury Employees Union and others on Feb. 12.

An estimated 6,000 to 7,000 IRS workers may be impacted, according to reporting from CBS News and the Associated Press.

The U.S. Department of the Treasury didn’t respond to CNBC’s request to confirm these numbers.

These mid-season staffing cuts could significantly impact filers, experts warn. So, with major IRS changes underway, here are some key things to know.

‘You may not notice a change’

Senate Finance Committee Democrats on Tuesday warned that IRS staffing cuts would cause a “tax refund train wreck.” Tax experts, however, say filing an accurate, electronic return should avoid any such issues.

“If you have a good submission, you may not notice any change,” said Tom O’Saben, an enrolled agent and director of tax content and government relations at the National Association of Tax Professionals.

Typically, it takes 21 days for the IRS to process an e-filed tax return. But that timeline could be longer for “corrections or extra review,” according to the agency.

Reduced staffing could make processing longer if there’s an issue with your return, experts say.

The IRS system could flag your return for incorrect personal details or missing information, which could require contact with the agency for assistance, O’Saben said.

“We haven’t seen any service delays yet,” he said. “But we’re going to. It’s just going to be a reality with less people.”

File soon if you’re expecting a refund

If you expect a tax refund and have all the correct forms, “get that return in as quickly as possible,” said San Diego-based tax attorney Adam Brewer.

“Even if the staffing cuts don’t impact process, there’s the potential for a government shutdown next month” as lawmakers debate spending negotiations, he said. “That will compound problems.”

Error-free, electronically filed returns may not be impacted by a government shutdown. But there could be further delays if there’s an issue with your filing, experts say.

Typically, the best way to speed up your refund is by filing electronically and choosing direct deposit for your payment, according to the IRS.

You can check the status of your refund via the agency’s “Where’s My Refund?” tool or the IRS2Go app.

Personal Finance

TIPS can provide an investor protection against inflation

Published

3 hours ago

February 21, 2025

Business Finance News

The Fed is 'very comfortable' staying on hold for an extended period: JPMorgan's Kelsey Berro

Although inflation has eased considerably, in many ways, it is still alive and well.

The consumer price index, which measures the cost of a wide-ranging basket of goods and services, has fallen gradually from a 9.1% pandemic-era peak in June 2022 to 3% in January. But it is still above the Federal Reserve’s 2% goal.

“The progress toward 2% inflation has stalled out, and the Fed knows it,” said Greg McBride, chief financial analyst at Bankrate.com. Federal Reserve officials have also expressed concern about the impact tariffs may now have on inflation.

How TIPS work

TIPS are issued and backed by the U.S. government like typical Treasury bonds, however, these securities are meant to hedge against rising consumer prices.

To compare, regular Treasury bonds could lose value over time if the interest they earn is below the rate of inflation. Currently, the bellwether 10-year Treasury bond is yielding just below 4.5%. (The same goes for the low yields on certificates of deposits when it comes to protecting long-term buying power.)

Alternatively, the principal portion of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. In this case, as inflation rises, the value of the principal will rise as well to maintain its value.

For example, an investor buys $1,000 in TIPS at a fixed rate of 1%. If inflation rises by 2%, the principal will rise to $1,020. The rate will stay the same 1%, but future interest payments are multiplied by the new principal amount of $1,020, so payments are $10.20 for the year (or $5.10 every six months, since TIPS pay interest twice a year).

TIPS are issued in 5-, 10- and 30-year maturities and when a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.

TIPS are a ‘valuable tool’

The threat of tariffs on imports is causing more investors to consider increasing their exposure to TIPS to mitigate inflation concerns, according to a recent report by Wells Fargo Investment Institute.

“TIPS continue to be a valuable tool for protecting purchasing power in an inflationary environment,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.

“With yields currently near decade highs, they’re certainly more attractive than in recent years,” said Boneparth, a member of the CNBC Financial Advisor Council.

US President Donald Trump speaks while signing an executive order in the Oval Office of the White House to impose 25% tariffs on all US imports of steel and aluminum, broadening his trade restrictions to some of the country’s top trading partners.

Bloomberg | Bloomberg | Getty Images

However, TIPS aren’t immune from losses even in an inflationary environment, according to Colin Gerrety, a certified financial planner and client advisor at Glassman Wealth Services in Tysons Corner, Virginia.

“Just look at 2022 as an example,” he said.

“Let’s say inflation spikes and interest rates rise at the same time,” he said, as they did that year. “TIPS might actually lose money if the negative impact from the rise in rates exceeds the adjustment that occurs due to inflation.”

In 2022, rising interest rates hurt TIPS and other bonds; TIPS had a -11.85% return that year, although that was still better than U.S. Treasurys.

How to use TIPS as an investment option

Consider the potential impact of tariffs on inflation going forward, said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California.

She recommends a strategy that combines fixed-income TIPS with dividend-paying stocks and laddered CDs for short-term cash flow needs. Sun is also a member of CNBC’s Advisor Council.

“I usually advise clients to view TIPS as one part of a diversified portfolio rather than a standalone solution,” Boneparth also said.

“While they offer the benefit of inflation-adjusted returns, it’s important to consider factors like tax treatment and the potential for lower returns if inflation moderates,” he added.

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Personal Finance

DOGE purge at FDIC threaten nation’s banking system

Published

21 hours ago

February 20, 2025

Business Finance News

U.S. Sen. Elizabeth Warren (D-MA) speaks to a crowd gathered in front of the U.S. Treasury Department in protest of Elon Musk and the Department of Government Efficiency on Feb. 4, 2025 in Washington, DC.

Anna Rose Layden | Getty Images

In response to a request from Sen. Elizabeth Warren, the Federal Deposit Insurance Corp. will review President Donald Trump‘s recent move to lay off more workers at the watchdog agency.

Backed by the Trump administration, Elon Musk and his advisory group, the Department of Government Efficiency, reduced the FDIC staff by around 1,000 employees so far this year through buyout offers and the layoffs of probationary employees, according to reports. The additional firings were part of a larger effort to shrink the federal bureaucracy.

The FDIC is already severely understaffed, which “threatens the stability of the banking system,” Warren, D-Mass., said in a letter sent on Feb. 10 to Inspector General Jennifer Fain and shared exclusively with CNBC. Senators Raphael Warnock, D-Ga., Chris Van Hollen, D-Md., and Lisa Blunt Rochester, D-Del., also signed the letter.

Fain responded to the lawmakers in a letter dated Feb. 19, which was also shared exclusively with CNBC, saying “the full effect and impact on the structure and mission of the FDIC due to the hiring freeze, deferred resignations, and any reshaping and restructuring remain to be seen.”

Further, Fain said, “we will be adapting our oversight work to better understand and determine the effect of recent changes and their impact on the FDIC to maintain stability and confidence in nation’s banking system.”

In a statement Thursday, Warren said she was “pleased that the FDIC Inspector General will review the threats to the stability of the banking system caused by the Trump Administration’s recent buyouts, terminations, and job rescissions to bank examiners and other FDIC staff.”

“These cuts threaten the reliability and integrity of federal deposit insurance and inhibit the FDIC’s capacity to ensure the stability and confidence that underpin our nation’s banking system,” she said.

Risks of ‘a shortage of cops on the beat’

In the initial letter to Fain, the senators said staffing shortages directly contributed to Signature Bank‘s failure in March 2023.

The lack of examiners “led to a series of supervisory delays, canceled or postponed exams, and quality control issues in the supervision of Signature,” the letter said.

Former FDIC chair Sheila Bair: Eliminating the FDIC would be a mistake

“The lesson learned in this case was that a shortage of cops on the beat can threaten the safety and soundness of the banking system and pose risks to the Deposit Insurance Fund,” the letter stated.

The incident marked the largest U.S. banking failure since the 2008 financial crisis, and one of the biggest bank failures in U.S. history. The unexpected shutdown also caused widespread concern among consumers about their deposits, their bank and the banking system.

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