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September 11, 2015
With Social Security celebrating its 80th birthday this year, it’s a good time to reassess whether the program still works, and whether it might even exist once your retirement rolls around. It’s seen its share of negativity, with many people doubting its solvency and ability to roll with the unsteady times.
But a funny thing is happening, and financial analysts aren’t exactly sure what to make of it. A new AARP survey shows that while most people agree about the unstable nature of Social Security, the majority still plan to depend on it for at least part of their retirement income.
Most retirement advisors recommend diversifying.
Most Americans Intend to Rely on Social Security Benefits
Based on the AARP survey, a full 80 percent of the 1,200 adults surveyed either depend on Social Security now or plan to later on. Further, about 1/3 of the people surveyed say that they either do or plan for Social Security to make up the bulk of their retirement income.
There’s an age disparity, though. Where younger adults, aged 18 to 20, said that they anticipate relying on Social Security heavily when they retire, 30 to 49 year olds aren’t so sure. Janet Novak, Forbes staff writer and tax and retirement policy expert, surmises that part of the youthful confidence comes from being too young to remember the Social Security privatization bid under the George W. Bush administration.
Most Americans Also Agree that Social Security is in Trouble
As strange as it may seem, the same people who plan to rely on Social Security also admit to faltering levels of confidence in the program. Carrying these concerns is a tide of uncertainty based on whether the trust fund is really facing depletion. If you examine the program’s most recent trustees report, the trust fund will run dry in 2034.
But with the grim numbers comes a renewed enthusiasm in supporting the program. Nearly 70 percent of people surveyed expressed the desire to contribute more in the form of Social Security taxes to keep the program alive. The most support came from younger adults, with 81 percent from that group embracing the idea of higher taxes. Sixty-eight percent of people aged 30 to 49 agreed to the same.
How to Save Social Security for the Long Term
Boston College’s Center for Retirement Research shows a deficit of about 2.68 percent of payroll earnings. With employers and employees splitting the bill, that means Social Security taxes would need to increase 1.34 percent for each until 2089 if taxes are the sole way to secure the program.
But that’s just one of many different proposals for bring Social Security into a stable spot. With election season looming, more ideas, such as higher taxes on higher earnings and pushing out full retirement until a later age, are likely to make the campaign circuit.
It’s ironic that the same people who plan to rely on Social Security are the ones who acknowledge it’s shortcomings. But then again, maybe it’s not. If support for higher taxes to save the program is embraced as willingly as the AARP survey shows, what might be happening is that the people who plan to use it have simply acknowledged their power to preserve it.
Retirement is coming sooner or later. Are you prepared for it, or are you still wondering where to begin? Either way, NewRetirement can help. Our tools can show you different ways to improve on what you’re already doing. And they can also hep you design a plan if you’re just getting started.
Check out our retirement calculator and see how Social Security, savings and investments can combine to provide you with a financially sound future.
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