The seeds of doubt are definitely sowed for those looking toward retirement.
The 2021 Social Security Confidence Survey from Atlanta-based retirement insurance company PlanGap showed that more than 70% of respondents had “a lot” or “a great deal” of concern that they would not receive their full Social Security benefits as promised to them during their retirement. The survey was conducted on the heels of the release of the Social Security Board of Trustees’ Annual Report, which also painted a gloomy picture that benefits would likely become insolvent a year sooner, absent action by lawmakers in Washington.
In line with the 2021 forecast from the Board of Trustees, survey respondents were informed that estimated Social Security benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because by 2033, the payroll taxes collected will be enough to pay only about 76% of scheduled benefits.
Regardless of political affiliation, more than 55% of survey respondents had little to no confidence that the government would solve the challenge of funding Social Security without reducing their benefits. Along party lines, Democrats were the least pessimistic (12% were “not at all confident”) compared to Republicans (31%) and Independents/Libertarians (32.3%).
Participants in the PlanGap survey consisted of those staring down retirement (age 45 or above) and came from different socioeconomic groups and political affiliations.
The thought of a 24% reduction in Social Security retirement benefits brought about a myriad of similarly stressful scenarios for comparison from respondents including a cancer diagnosis, divorce and unsurprisingly, a global pandemic.
In terms of what the primary solution the government will do to fix Social Security’s funding challenges, about a quarter believe Congress will increase the age at which people become eligible. Other solutions expected from Congress include reducing benefit amounts for high earners, borrowing more money and increasing payroll taxes, among other ideas. These options track with the pessimism expressed in an earlier PlanGap survey, which noted that nearly four in five respondents agreed that Social Security would need to be in crisis before a fix is attempted.
“Many Americans have a sense that something is wrong with Social Security and this data just confirms that deeply held concern,” remarked PlanGap Founder and CEO, David Duley. “The truth is, Social Security is the foundation of most retirement income plans and the government has announced that it may not be able to pay in full and honor those promises. People are looking for ways to have more control over their retirement income and protect their Social Security benefits from being used as a political football.”
SEE ALSO:
• Social Security Trust Funds Lose Another Year of Solvency
• Latest Social Security Bill Seeks to Keep Vulnerable Americans from Poverty
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
