The agency recently announced plans to lay off employees as part of the administration’s plan to cut costs at government departments.
The Social Security Administration (SSA) estimates that it is on course to save hundreds of millions of dollars in the 2025 fiscal year, with the bulk of the savings coming from payroll reductions.
“The agency has thus far identified over $800 million in cost savings or cost avoidance for fiscal year (FY) 2025 in areas of payroll, information technology, contracts and grants, and space savings (i.e., real property), and other savings through new, common-sense approaches to printing, travel, and purchase card policies,” SSA said in a March 3 statement.
“The [SSA] continues to make good on President Trump’s promise to protect American taxpayers from unnecessary spending.”
Out of the $800 million, payroll accounts for the most savings at $550 million. A freeze on hiring is in place at the SSA and Disability Determination Services agencies, along with a drastic reduction in overtime work.
The Information Technology Systems budget is expected to contribute $150 million in savings through the cancellation of non-essential contracts and the identification of reductions in other contracts.
An estimated $30 million will be saved on guard services and $28 million by adopting centralized printing activities.
SSA said it “remains committed to identifying more ways to save taxpayers money.”
Lee Dudek, acting commissioner of SSA, said the agency has operated on autopilot for a long time. “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,” he said.
The SSA has taken several actions under the Trump administration to make the agency more efficient.
Late last month, the agency said it was dissolving the Office of Civil Rights and Equal Opportunity in a move to enhance operations. Employees in the office were put on administrative leave.
The Social Security Administration also eliminated what it described as a “wasteful department,” the Office of Transformation. Dudek called it a “redundant” office created under the previous administration and that the closure was the agency “righting that wrong.”Last month, President Donald Trump signed an executive order aimed at implementing “a critical transformation of the federal bureaucracy.”
It asked agencies to work with the Department of Government Efficiency (DOGE) to identify potential “large-scale reductions” in the workforce. “By eliminating waste, bloat, and insularity, my administration will empower American families, workers, taxpayers, and our system of government itself,” said the order.
On Feb. 27, SSA announced plans to lay off a large number of employees, offering incentives of up to $25,000 to workers who decide to separate voluntarily.
White House adviser Elon Musk said recently that DOGE needed to act quickly to find ways to cut federal spending, or Social Security and Medicare would be impacted in the future.
Trump has asserted that his administration will not be touching Social Security unless there is fraud or other issues involved.
Musk’s comments came as a trust fund backing Social Security is set to run out by 2034, according to estimates from the Congressional Budget Office (CBO).
CBO calculates that scheduled benefits for plan participants may be 23 percent smaller by 2035, worsening to 28 percent smaller by 2098.
The trust fund decline is happening as the money taken out of it now exceeds what comes in from payroll tax revenues.
Over the past years, employee numbers contributing to the program have declined. In 1960, there were 5.1 workers per beneficiary, which has now fallen to 2.8, according to the nonprofit Peter G. Peterson Foundation.
A Jan. 14 post by the foundation suggested that lawmakers could change the payroll tax rate in order to ensure Social Security received more revenues.
“If they had taken action in 2010, when the baby boom generation started turning age 65, the financial standing of Social Security would not be in the same kind of jeopardy it is in today,” the post said. “Another option to raise revenues for Social Security is to eliminate the Social Security tax cap. Currently, workers only pay Social Security tax on the first $168,600 of income.”