Half of Americans born after 1964 don’t think they’ll receive any benefits at all from Social Security when they retire, according to a 2014 Pew Research Center survey. Among baby boomers under age 65, 28% responded that they didn’t expect to receive any Social Security benefits.
That’s a lot of pessimism about the federal retirement program, but Americans don’t have to worry too much about the future of Social Security. Here are three key reasons why your entitlement will be there when you need it.
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1. Social Security isn’t running out of money
“Everyone knows” that Social Security is running out of money. But “everyone” is wrong.
It’s true that the combined Social Security Trust Funds for retirement and disability are expected to be depleted in 2034. Over decades of collecting more in payroll taxes than the program has spent on benefits, it built up a healthy surplus. Now the opposite is true, and more is going out than is coming in. So yes: Assuming Congress does nothing to increase the amount of taxes going into the Trust Funds, the surplus will evaporate along about that time. However, Social Security wouldn’t be broke even then, because revenue from payroll taxes (and taxes on benefits for some individuals) keeps flowing into the program continuously.
So what would happen in 2034? Social Security would still be able to pay out around 79% of scheduled benefits based on its ongoing revenues. It could continue to pay at that level all the way through 2090, long after the millennial generation runs out of room for candles on their birthday cakes. After that point, Social Security would need to make another trim, but could still pay out 74% of scheduled benefits.
The math clearly shows that something needs to be done to prevent benefit cuts down the road. But Social Security won’t truly run out of money — at least not in the 21st century.
2. There’s very strong support for sustaining the program
Of course, benefit cuts to 79% of current levels would be very painful for millions of Americans. Should you be concerned about future benefit reductions? Maybe. But consider a couple of points.
First, Americans are divided about many things, but Social Security isn’t one of them. A Pew Research Center poll conducted in 2016 found that 71% of registered U.S. voters thought that Social Security benefits should not be reduced. There wasn’t much difference in the percentages between Democrat and Republican voters.
Second, politicians tend to do what it takes to get reelected — not always, but usually. As long as the American public remains strongly against reducing Social Security benefits, it’s likely that most members of Congress will toe the same line.
I suspect that what President Dwight D. Eisenhower said in 1954 is still applicable today and will be in the future:
Should any political party attempt to abolish Social Security, unemployment insurance and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes that you can do these things. Among them are a few Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid.
3. Potential solutions already exist
There are plenty of ways to bolster the Social Security program and avoid benefit cuts down the road. Among the most commonly proposed are increasing payroll taxes, indexing the retirement age to the longevity of Americans, modifying or eliminating the current payroll tax cap, and pegging cost-of-living adjustments to a slower inflation rate known as chained CPI.
Some of these options are controversial, but others have had bipartisan support among Americans. The main thing to know, though, is that fixing Social Security isn’t an impossible task. Our representatives in Washington, D.C., might not do anything until they absolutely have to, but at least they won’t have to scramble to find a workable solution.
The real worry
You don’t really need to worry too much about the complete disappearance of Social Security. However, there is a real issue to be concerned about: retirement saving in general. Social Security benefits won’t be enough for many Americans to maintain their current standards of living into retirement. Unfortunately, too many people aren’t on track to save enough to make up the gap.
Worrying by itself won’t help. Turn concern into a plan, and turn the plan into action — just like you expect your senators and representatives to do when it comes to preserving Social Security for years to come.