Aug 14, 2020 - Economy

Survey: Fears grow about Social Security’s future

Data: AARP survey of 1,441 U.S. adults conducted July 14–27, 2020 a ±3.4% margin of error at the 95% confidence level; Chart: Naema Ahmed/Axios

Younger Americans are increasingly concerned that Social Security won't be enough to wholly fall back on once they retire, according to a survey conducted by AARP — in honor of today's 85th anniversary of the program — given first to Axios.

Why it matters: Young people's concerns about financial insecurity once they're on a restricted income are rising — and that generation is worried the program, which currently pays out to 65 million beneficiaries, won't be enough to sustain them.

Details: Of the respondents who said they weren't confident in the future of the Social Security system, "money running out" of the fund and "not trusting the government to keep its promises" were cited as the top reasons for worry.

  • By the numbers: 72% of respondents told AARP they did not think Social Security checks would be enough to get by on, a worry that was most pronounced among those aged 30-49.

Yes, but: A separate finding from retirement trade group LIMRA says younger non-retired workers don't expect to rely on Social Security as their main source of income. Instead, the group is betting they live longer — and thus have increased health costs and other living expenses — and will require a bigger nest egg than previous generations.

  • Per LIMRA, Americans aged 40-54 say they expect just 20% of their income to come from Social Security. Compare that with the 53% of retirees today who say Social Security is their primary source of income.

The state of play: Trump's executive action on payroll tax deferral — and recent comments that opened the door to his support of a permanent payroll tax cut — stoked concerns that the funding stream for Social Security could be in jeopardy. (Since 2016, Trump has promised he wouldn't touch Social Security).

  • Industry leaders, including AARP's CEO, are calling on Trump to spell out a replacement source of funding for the program.
  • The system has already been hit as payroll tax receipts are walloped from the coronavirus recession that's caused tens of millions of Americans to lose work. Jobless workers don't pay payroll taxes — and the employer no longer has to pay in for those workers' share.
  • One model by the University of Pennsylvania estimates the Social Security retirement fund could run dry in 2032 in a worst-case scenario — a timeline that's accelerated from the previous projection of 2036 since the pandemic hit.

The intrigue: The AARP survey found that respondents' plans to rely on Social Security are nearly identical across party lines.

  • A majority of respondents of all political stripes were concerned that their retirement savings could be wiped out at any time by a major health care expense or recession (which we are in now).
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