Stop Scaring Millennials About the Future of Social Security
Some tropes never die. The one about Millennials not being able to rely on Social Security when they retire re-surfaces every few months, most recently in an article by John Csiszar on the financial news site GoBankingRates. The article, Here’s How Social Security Will Look for Millennial Retirees, paints a bleak picture for the future of a program that has provided seniors with basic financial security since the 1930s.
It is true that, if Congress takes no action, the combined Social Security trust funds will become depleted in 2034, after which the program could pay 76% of benefits. But that is far from a forgone conclusion. Democrats in Congress are taking action to avert trust fund insolvency — and actually boost benefits at the same time. Rep. John Larson’s Social Security 2100 Act: A Sacred Trust, which he just introduced this fall, would do both — and improve the cost-of-living adjustment formula (COLA) for seniors.
But Csiszar suggests that in order to avoid insolvency, Congress would have little choice but to raise the Social Security retirement age to 70. What he doesn’t say is that this would be a huge benefit cut. Raising the retirement age from 67 to 70 would drastically reduce the net amount of income workers receive during the entirety of their senior years, especially if they must file for benefits before their full retirement age.
Nonetheless, Csiszar presents it as a reasonable proposition, since Americans are living longer than when the program was created:
“For starters, in 1930, just before Social Security came to be, life expectancy in the U.S. was just 58 years for men and 62 years for women. As of 2020, those numbers have jumped to 75.1 years and 80.5 years, respectively.” – GoBankingRates, 11/29/21
Just because Americans are living longer does not mean they can work until they are seventy – or that they do not deserve a financially secure retirement after the current eligibility age of 67. (The retirement age was raised from 65 by previous Social Security reform legislation.) What’s more, seniors in their late 60s who still want to work may be laid off – or unable to find employment – because of pervasive and enduring age discrimination in the workplace.
The fact that raising the retirement age to 70 could save the program $120 billion (according to the article) does not make it a wise policy. As we have often pointed out, seniors are not figures on a ledger; they are human beings with real needs like everyone else. Seniors living longer need more – not less – retirement income over a longer period of time.
There would be no need to even consider raising the retirement age for Social Security if the program can bring in more revenue. Rep. Larson’s bill would achieve that by adjusting the payroll wage cap so that high earners would contribute payroll taxes on income exceeding $400,000 per year. But Csiszar turns this equitable fix into a negative, claiming that it will hurt younger workers:
“High earners would be forced to fork over additional taxes to the Social Security program, providing additional funding for retirees. This could translate to higher tax bills for top-earning millennials.” – GoBankingRates, 11/29/21
This is a disingenuous argument. Adjusting the cap would not impact the majority of wage earners (since most workers make significantly less than $400,000 per year). The average Millennial earned $47,000 in 2021, placing that age group well below the income level where they would have to contribute additional payroll taxes. Meanwhile, it’s reasonable that high income earners pay their fair share into Social Security, in exchange for higher benefits.
Instead of encouraging Millennials to support commonsense reform like Rep. Larson’s bill, Csiszar prefers to sow fear that Social Security won’t be around when this generation retires.
“Rather than relying on Social Security benefits that may or may not be there, Millennials should take the decades they still have ahead of them to max out 401(k) and IRA contributions and build up their supplementary savings to the point where they won’t need to rely on Social Security.” – GoBankingRates, 11/29/21
While there’s nothing wrong with encouraging Millennials to save for retirement, it is becoming increasingly difficult for workers to put away money. Rising living costs and stagnant wages have made it enough of a challenge for most Millennials to pay their monthly bills, let alone save for retirement. Older Americans are relying more and more on their Social Security benefits for financial survival.
Millennials are expected to receive twice as much as today’s retirees in retirement benefits as today’s seniors do, and they will need every penny. Meanwhile, many younger adults are unaware that Social Security is there for them in case of disability or the death of a family breadwinner. The average worker with a spouse and two children would have to purchase more than $600,000 in life and disability insurance to replace the protections Social Security provides. In fact, some 1.2 million millennials already receive Social Security benefits.
Millennials will rely on Social Security even more than previous generations. But the program’s opponents want younger adults to believe Social Security won’t be around when they need it.
Scaring Millennials into believing Social Security won’t be there for them upon retirement can become ‘self-fulfilling prophecy.’ If Millennials, along with other age groups, don’t support commonsense improvements to Social Security of the kind Rep. Larson offers, then the program may suffer from a revenue shortfall in the 2030s, triggering severe benefit cuts. Opponents of the program have long attempted to divide the generations in order to weaken support for Social Security.
The best way to ensure that Social Security will be there for future retirees is for the American people to unite around an agenda to increase revenues and boost benefits. In so doing, we must reject conservative scare tactics designed to undermine the program. We are not saying that Csiszar falls into this camp, but his article clearly is influenced by propaganda that says we must cut Social Security in order to save it.