CNN
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Social Security is one of the most popular government programs in the United States because it is important to the financial security of so many retirees.
And it will be just as important for American adults who have not yet retired.
That's why so many Americans are worried about how their benefits will change, given that the program is expected to run out of revenue within a decade. That means only enough income comes in to pay most of the promised benefits, but not 100%.
More than half (53%) of all non-retired U.S. adults said they expect to need to draw on Social Security to pay for necessary expenses, according to a new Bankrate survey. Among those 60 and older, the age group closest to retirement, 69% said they expected to rely on Social Security benefits, and 47% said they expected to be “very dependent.”
According to the survey, this number is lower than the 77% of current retirees surveyed who said they rely on benefits to cover essential expenses. Of this group, 62% said they were “very” dependent.
That's not surprising. Social Security benefits only replace a portion of Americans' pre-retirement income. The rest must be made up by your savings (and pension, if you have one). And many Americans don't save enough or don't have a large enough pension to provide themselves with a sufficient retirement income.
“American workers tell us they feel like they're holding up on their retirement savings, but only about half say they believe they can save as much as they need. Social Security “It's an important backstop,” said Mark Hamrick, senior economic analyst at Bankrate.
In fact, only 31% of non-retired adults surveyed said they had no plans to rely on Social Security benefits in retirement, and just 14% said they would not rely on Social Security benefits at all. It was.
How much Social Security is for you depends on many factors, including your 35-year average career earnings and the age you start collecting.
Consider someone who is currently 54 years old and has a “moderate” average career income ($63,469 per Social Security in 2022). Their “normal retirement age” for collecting Social Security benefits is 67 years old. Under current law, if you retire in 2037, your promised benefits are estimated to replace 40.9% of your pre-retirement income. analysis According to the Social Security Administration.
But the benefits paid could be even lower if lawmakers don't make changes to the program, with the Social Security Board of Trustees estimating that by 2035, revenues will be lower than promised payments. .
And the majority of people surveyed by Bankrate, both non-retired and retired, expressed concern about receiving the full benefits they were promised.
It is unclear whether President-elect Trump will take action to close this shortfall during his second term, and if so, what specific changes he will support. But if he were to actually tackle what is known as the third rail in politics, it would likely be a politically difficult undertaking given the importance of the plan to all Americans.
But regardless of changes, Social Security benefits are designed so that the lower your income, the higher the replacement rate, and the higher your income, the lower the replacement rate. For example, a Social Security Administration analysis shows that even the same 54-year-old has a low income (average lifetime income of about $16,000 to $29,000). If you have an average six-figure income, that would be 27% to 34% under current law.
When calculating how much you need to save for retirement, it's helpful to get estimates from the Social Security Administration based on your specific income history. If you haven't received a paper statement from your agent in a while, it may be because: Sign up for an online account Access your quote.
