A Majority of Americans Actually Believe This Social Security Myth: It’s hard to deny the fact that one of the top worries of Americans both young and old is that they often wonder whether the Social Security program will even be around in the decades ahead.
In fact, according to the TransAmerica Center for Retirement Studies, a whopping 73 percent of workers responding to a recent survey indicated that they agreed with this statement: “I am concerned that when I am ready to retire, Social Security will not be there for me.”
Moreover, Nationwide’s 8th Annual Social Security Consumer Survey, conducted by the Harris Poll on behalf of the Nationwide Retirement Institute, revealed that 71 percent of American adults actually believe that the Social Security program will eventually run out of money.
“It’s understandable why so many people believe benefits are in danger of running out. There are frequent warnings about the future of the Social Security trust fund. In fact, just recently, the program’s trustees released a report indicating that the trust fund will be exhausted in 2034,” she writes.
“But that’s actually way scarier than it sounds. Even if the trust fund runs dry, that doesn’t mean Social Security benefits won’t be there for you,” she continues.
It appears that AARP shares similar sentiments. The group’s site reported that “as long as workers and employers pay payroll taxes, Social Security will not run out of money.”
It continues: “It’s a pay-as-you-go system: Revenue coming in from FICA (Federal Insurance Contributions Act) and SECA (Self-Employed Contributions Act) taxes largely cover the benefits going out. … Without changes in how Social Security is financed, the surplus is projected to run out in 2034. Even then, Social Security won’t be broke. It will still collect tax revenue and pay benefits. But it will only bring in enough to pay 78 percent of scheduled benefits.”
Regarding that 22 percent pay cut—if it indeed happens—will surely be difficult to swallow for many cash-strapped retirees.
But “it’s a far cry from Social Security not being there for current workers at all in the future,” Bieber notes.
Saving More for Retirement
She even suggests that such misplaced fear about Social Security running dry could, in fact, be a blessing in disguise—as it would motivate Americans to save more money for their golden years.
“Rather than anticipating Social Security won’t be there for you, it’s best to make your decisions about claiming benefits while operating under the assumption you’re likely to get most or all of the promised money, since lawmakers are unlikely to allow such a popular program to be drastically cut,” Bieber contends.
“But you should also realize that even if you do get every dollar promised, you’ll need supplementary savings, so plan accordingly,” she concludes.
Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.