Concerns Surrounding Social Security’s Future

A recent survey conducted by the Transamerica Center for Retirement Study (TCRS) reveals that about 70% of Americans are anxious about the future of Social Security, fearing it may not be available when they retire.

As part of the Transamerica Institute, a nonprofit organization, TCRS runs one of the largest, long-standing annual surveys on retirement. Social Security, which marked its 90th birthday on August 14, has been a crucial element for retirement income for millions of Americans. It has also provided support for disabled individuals and survivors of deceased workers. Yet, despite its long-standing significance, the program faces a potential bankruptcy crisis within the next decade if lawmakers do not act.

The TCRS survey, which gathered insights from 10,009 adults over 18 between September 11 and October 17, 2024, found that 71% of those not yet retired share this concern. Furthermore, about 87% of Americans express anxiety regarding major retirement issues, with the top concerns involving potential cuts to Social Security and health-related declines prompting a need for long-term care—39% of respondents highlighted these specific worries.

According to a report from the Social Security Council, the trust funds — Old Age and Survivor Insurance (OASI) and Disability Insurance (DI) — are on track to be depleted by 2034.

Various proposals have been put forth by lawmakers to address these issues, including raising the retirement age and implementing fair share laws. However, substantial progress has been elusive. Doug Carey, founder of WealthTrace, commented on the political inertia, saying, “I think it’s the political situation and the lack of action.” He believes many politicians are hesitant to tackle these issues due to potential damage to their reputations and reelection prospects, leading to continued delays in addressing the problem.

The survey also indicates that many Americans are worried about their personal savings as retirement approaches. Approximately 63% feel they aren’t saving enough to meet their future needs. Among respondents who are retired or nearing retirement, 28% “strongly agree” and 35% “somewhat agree” with this sentiment.

Interestingly, nearly one-third (32%) of respondents expect Social Security to be their primary source of retirement income, while 29% plan to rely on retirement accounts. Only 12% see other savings and investments as their main resource, and just 11% rely on ongoing work. A mere 9% view company-funded pensions as their main income source.

The survey highlights a pronounced reliance on Social Security among retired women, with 59% of female retirees identifying it as a primary income source compared to 47% of male retirees. For those not yet retired, 29% of women and 22% of men cite it as their primary source of income.

Carey notes that many individuals are already modifying their retirement expectations based on anticipated benefit reductions. “Many people assume their benefits could drop by 25% to 50%,” he explained. Some have opted to claim benefits early at age 62 as a precaution.

Jackson Ruggiero, co-founder of DisabilityGuidance.org, echoed that the survey results are to be expected. He remarks, “The program faces real financial challenges.” He adds that a significant trust deficit in Congress’s ability to act promptly fuels this uncertainty, leading younger workers to prioritize personal savings over reliance on Social Security.

Ruggiero advises a balanced outlook for those concerned about retirement. “You should not assume your benefits will disappear. Save as much as you can, take advantage of employer retirement plans, and if possible, delay claiming Social Security benefits to maximize monthly checks,” he suggested.

Both experts appear to agree on a crucial point: action is not being taken. Carey predicts inaction until 2033 when cuts to benefits will be unavoidable. This isn’t the first time Social Security has faced financial challenges. In the early 1980s, similar issues arose, prompting lawmakers to implement reforms like payroll tax increases and a gradual rise in the retirement age.

“Since its establishment 90 years ago, Social Security has been a vital part of retirement income, providing financial security to millions of older Americans,” they noted. “With the looming depletion of the Social Security Trust Fund, now is the time to consider reforms for sustainable support over the next 90 years.”