Social Security Running Out Is A Big Worry Among Millennials

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social security millennials

Millennials are often stereotyped as being a lazy generation who doesn’t really care much about the future, but a recent survey from Transamerica reveals that 25 to 40-year-old people do think about at least one impending issue.

Millennials are scared that social security benefits will dry up.

In the survey, more than three-quarters of millennials confessed to “worrying that Social Security will not be there” when they’re ready to retire.

For this reason, Millennials are counting on themselves and not the government to keep them afloat in their later years.

“Millennials are a generation of digital natives and do-it-yourself retirement savers.

Millennials were entering the workforce around the time of the Great Recession —with higher levels of student debt than previous generations.

As retirement investors, they began saving in a depressed market and have enjoyed one of the longest-running bull markets in history.

The coronavirus pandemic and 2020 recession mark the first major market downturn they have experienced.

Unlike their parents’ generation, many Millennials expect their primary source of retirement income to be self-funded through retirement accounts (e.g., 401(k)s, 403(b)s, IRAs), or other savings and investments.

Social security, created back in the 1930s, was created to “provide for the general welfare by establishing a system of federal old-age benefits.”

The math involved is harder to decipher than common core, but the concept is pretty simple, as explained by Money.com.

The broad strokes these days are that you help finance it; you pay 6.2% tax, and your company pays 6.2% tax on your earnings up to $142,800.

The average monthly Social Security check is $1,543.

So will Social Security survive over the next three or four decades?

social security running out

Ummm…maybe?

According to the official Social Security website, the plan started paying out more than it was collecting in 2010, and the reserves are set to run out by 2035.

By that point, the money collected via payroll tax will “be sufficient to pay only about 79% of program costs.”

Money.com explains that social security will likely be around when millennials are ready to call it quits and make TikTok vids with the grandkids all day, but they’ll have to wait a few extra years.

“…the general consensus in the financial planning industry is that Social Security won’t suddenly evaporate… but it probably will change…

Take the age requirement, for instance. Initially, the full retirement age — the age at which you can get all your benefits — was 65. But in the 1980s, the government moved to gradually raise it to 67.”

Another proposed idea involves making people who earn over $400K a year – and probably won’t need Social Security – pay more taxes to replenish the funds.

[via Money.com]

Author
Chris Illuminati

Chris Illuminati is the author of five books and has written about personal finance, wealth, debt management, and entrepreneurship for numerous outlets including Wise Bread, Grow or Die, and Bankrate.

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