Americans continue to have a bleak view of the future of Social Security.
A just-released study by Atlanta-based PlanGap found that seven out of 10 respondents doubt that they will receive their promised Social Security benefits.
Survey respondents were informed that by 2034 the payroll taxes collected would only be enough to pay about 77% of scheduled benefits as forecasted by the official Social Security Annual report.
The 2022 report from the Treasury Department’s Social Security Board of Trustees found that without changes, the Old-Age and Survivors Insurance Trust Fund is projected to become depleted in 2034, one year later than last year’s estimate. At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 77% of scheduled benefits.
Unsurprisingly, Treasury Secretary Janet Yellen and the Social Security Administration Board of Trustees received little love from those surveyed by PlanGap. An estimated 54% of survey respondents answered they are not confident in the official insolvency estimates and believe the Social Security program is in worse shape than indicated in the report.
However, the projected Social Security cost-of-living adjustment for 2023 is 8.6%, which is the highest inflation adjustment in 40 years and boosted monthly checks by an average of $93.
Compared to last year’s PlanGap survey, this year’s findings showed a dramatic increase, regardless of political affiliation, in Americans’ lack of confidence that the government will be able to solve this funding challenge without resorting to cutting benefits.
By party lines, the report found that Republicans’ lack of confidence in the government’s ability to solve the challenge of funding Social Security without reducing benefits increased 15% year over year. And while Democrats control the House, Senate, and White House their lack of confidence jumped 64% percent versus the 2021 Confidence Survey results.
Retirement planning concerns were aplenty in the report:
- 86% of respondents expect Social Security to have a moderate to major role in their retirement income plan.
- 82% of respondents indicated they are frustrated/angry or scared/nervous that benefit cuts will negatively affect their retirement plan’s success.
- Only 8% of respondents indicated they are hopeful the government will solve the funding challenges facing Social Security without reducing benefits.
- 62% believe Congress will primarily look to cut benefits vs. raising taxes or increasing the national debt.
“Even more so than last year, Americans’ trust in the government’s ability to get big things right, like when Social Security may run out of money, is waning,” said PlanGap Founder and CEO, David Duley.
He added that because Social Security plays such a foundational role in the vast majority of retirement plans, “the message from the government that they may not be able to honor their promises to pay benefits in full only adds to the stress of planning in these very uncertain economic times.”
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.
Professor Laurence Kotlikoff has been writing for years about the imminent failure of Social Security and how to fix it. See for example this article from 2016 https://money.com/social-security-broke-fix/