The Future of Social Security

Key Takeaways

  • NerdWallet recently published the article “What Millennials Get Wrong About Social Security.”
  • 80% of millennials believe that Social Security will no longer exist by the time they retire, but in actuality, it will still be around in some form.
  • The belief that there will be no Social Security may affect how millennials are saving for retirement.

NerdWallet recently wrote in their article “What Millennials Get Wrong About Social Security,” about a Transamerica survey which found that 80% of millennials believe that Social Security won’t exist by the time they’re ready to retire. (Millennials are defined as those people born between 1979 and 2000.)

This isn’t surprising, given that there have been numerous reports for many years about how Social Security is running out. However, while it’s true that benefits may decrease in coming years, Social Security is structured such that there will be some form of it decades from now.

It’s important to note that Social Security benefits come from two sources: a Social Security trust fund (currently scheduled to be depleted by 2034), and the collection of hundreds of billions of dollars in payroll taxes on a continuous basis. This means that if Congress doesn’t intervene and the trust fund does run out, Social Security will still be on track to pay 77% of projected benefits.

Translated to dollars, if you’re estimated to receive $2,500 per month from Social Security, you may find that you receive 20 – 30% less than that estimate, meaning maybe you’ll receive $2,000 or $1,750 instead. So, it’s not $0, but do you plan around it?

Well, it may be a good thing that millennials believe there won’t be any Social Security in their retirement and aren’t planning their retirements with it in mind. Why? Other studies show that over 30% of those 55 and older have no retirement savings at all. For these older generations, banking on Social Security for retirement was a given. Unfortunately, for most Americans, Social Security benefits are not enough to live on.

So while relying on Social Security isn’t enough for retirement, there will be some form of it in the future, because it’s a pay-as-you-go system, even once the trust fund runs out. And for millennials who are saving for retirement and aren’t counting on Social Security, those benefits may be a sort of unexpected bonus – not enough to live on, but better than nothing. Until next time, enjoy.

Gary

Copyright © 2019 Protinus. All rights reserved.

Gary has provided wealth management services to clients for over 30 years. He is credentialed in financial services with practical experience in all areas of finances and money. He is the author of Changing the Conversation, Wealth of Everything, and co-author of The Business Battlefield.

He is genuinely interested in getting to know the person in front of him. Who are they? What’s most important to them? Where do they want to go in life? Whether he’s advising clients, mentoring his team, or coaching entrepreneurs, Gary is always simplifying complexity and motivating others to take the next action that’s right for them.

Copyright © 2022 Protinus. All rights reserved. 

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