Economy

If You Just Entered the Workforce, Not to Worry: Social Security Isn't Going Anywhere

Surprising numbers of workers in their 20s and 30s have little faith in their retirement security. Here's why they should be more optimistic.

The level of skepticism about retirement security for workers in their 20s and 30s can be surprising at first: A 2009 "Retirement Confidence Survey" by the Employee Benefit Research Institute revealed that only 13% of workers over the age of 25 feel very confident about having enough money to see them through retirement, the lowest level since they began the survey in 1993. The survey also found that workers age 55 and older are far more likely than younger workers, particularly those ages 25 to 34, to say they will rely on income from Social Security to get them through the retirement years. And one ABC News/Washington Post poll conducted in 2004 found 7 percent of people in their 20s and just 15 percent of those between 30 and 40 expected to gain full benefits from Social Security, compared with 59 percent of people 65 and older.

But if you combine the natural youthful inclination to put off serious planning for retirement, sagging public confidence in elected officials in Washington, and exposure to years of Wall Street-funded PR warning of economic collapse from future government "entitlement spending," such skepticism on the part of young workers is understandable. 
 
According to Christian Weller, a senior fellow with the Center for American Progress, it’s nothing new for young people to express uncertainty about Social Security.
 
“In surveys since the 1970s we’ve seen that people’s confidence in Social Security grows as they age,” he explains. “Most young people don’t entirely understand what Social Security is and how it works. Retirement is a distant concept, but as they age they begin to appreciate what it can provide, including survivorship and disability benefits.”
 
For some of today’s younger workers, there still remains hope that, before the whole thing goes belly up, the government will in fact step in and do something.
 
“My first knee-jerk answer to the Social Security question is, ‘yes, I do think it will be around,’” says Janel Hastings, a 39-year-old university administrator. “This is, in part, due to the belief that no politician of extraordinary leadership in the U.S. will let Social Security fail under his/her watch. That said, I don't think it will be as funded, as robust or as beneficial as it has been in the past. It may certainly be only a shell of its former self.”
 
For others, it’s simply one cog in a retirement plan they figure they’re mostly going to have to take care of on their own. Some, like Birdsong, simply plan to work until they drop. Others are already making alternative plans.
 
“I have no confidence that Social Security will still be around,” says Marina Fish, 38, a graphic designer. “Between now and then, I plan to buy enough property to rent out so I have income I can rely on.”
 
A series of polls conducted in 2005, around the time of Bush’s failed push for privatization, found some pretty clear public opinions on what should be done to fix the problem. A CBS/NYTimes poll found that 61% of people felt privatizing Social Security would actually make retirees worse off than they already were. In the same poll, 67% of people were against raising the retirement age  — a solution that’s recently been bandied about by Congress — while in an almost direct flip-flop, 63% of people supported raising the cap on income subject to social security taxation from it’s current rate ($90,000 in 2005, $109,000 today). And in a Hart Research Poll conducted that same year, 82% of participants supported the development of some sort of tax-free retirement savings options separate from Social Security.
 
But in focusing on the question of why we’re paying into a program that may not even be around come our golden years, we may have failed to probe an even more critical question. Are we right to worry?
 
According to Monique Morrissey, an economist with the Economic Policy Institute, the voice of doom on Social Security is more a PR problem than an actual worry.
 
“The crisis with Social Security is a big fat lie as far as I’m concerned. The right has raised a great deal of attention around what’s really not much of an issue, and the democrats have yet to push back.”
 
“The projected deficit is incredibly uncertain,” Morrissey explains. “It’s only 2%, which is well within the margin of error. If the economy continues to limp along for the next 75 years, then maybe those projections could be met. But the truth is no one really knows what’s going to happen.”
 
Morrissey posits that dealing with more pressing economic issues – primarily skyrocketing healthcare costs – is the most effective way to curb any potential problems with Social Security. Making healthcare more affordable would result in a healthier aging workforce who could work longer with fewer absences and would diminish the number of people filing for disability benefits.
 
She adds that the most logical way to give added security to Social Security would be to simply remove the cap on taxable income.
 
“The fix is really quite simple. In fact, if we raised or eliminated the cap and raised the payroll tax slightly, offsetting the effects for low-income workers, I think we’d be in a position to actually expand social security benefits.”
 
“Social Security will continue to provide the core part of most American’s retirement,” continues Morrissey. “Not just for low-income but also for the majority of middle-income families. It remains far more reliable than the 401(k).”
 
Weller echoes Morrissey’s confidence in the future of the program.
 
“Social Security is in decent shape, certainly compared to other government programs for the aged, like Medicare and other retirement benefits like the 401(k),” he says.
 
“At some point the system will need an overhaul, most likely a combination of tax increases and cuts, benefit increases and cuts, and either raising or eliminating the income cap. But we have time. The outlook for Social Security should improve as the economic outlook improves and right now there are more pressing problems. I see a national dialogue on revamping the program beginning sometime around 2011 or 2013.”
 
Until then, young professionals might just have one less thing to worry about after all.

Nan Mooney is the author of "(Not) Keeping Up with Our Parents" (Beacon, 2008). Read more about the book and her work at Nan Mooney.com.