A recent report has revealed a startling lack of awareness among Americans about the impending financial crisis facing Social Security.
The report found that a staggering 70% of Americans are unaware that the Social Security program is projected to run out of funds in less than a decade.
The survey, conducted by the Peterson G. Peterson Foundation, found that only 30% of Americans are aware that due to the ongoing funding crisis, Social Security will be forced to slash its benefits by 21%.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, expressed little surprise at these findings. "Most operate under the assumption the Social Security program will always be there for them and fully funded to provide for their financial needs later in life," Beene said. "The stark reality is cuts will have to be made to keep the program operational, and millions of Americans will be affected."
The looming financial crisis is largely due to the increasing number of baby boomers retiring and claiming their Social Security benefits. With baby boomers living longer than previous generations and a dwindling number of younger workers to sustain the program, the financial stability of Social Security is under threat.
Experts predict that if no reforms are made to the program, the average couple could face a cut of $17,000 in their benefits within the next nine years.
Upon learning of this impending crisis, 97% of survey respondents agreed that it is crucial for elected leaders to take steps to strengthen Social Security.
"The May 2024 Trustees Reports confirmed that Social Security is on a rapid path to insolvency, and today's new survey shows voters want leaders to prioritize solutions to prevent devastating cuts to this essential program," said Michael A. Peterson, CEO of the nonpartisan Peterson Foundation.
Peterson added, "Voters understand that 'not touching' Social Security is not an option because automatic cuts are unacceptable and waiting only makes the problem more costly and difficult to solve."
Since its inception as an old-age insurance plan in 1935, Social Security has expanded to provide support for survivors and disabled workers. However, the program's financial stability is increasingly under threat.
The current payroll tax that employees contribute towards the program will be insufficient to fully sustain baby boomers' benefits in less than a decade. The retirement futures of Gen X, millennials, and Gen Z are even more uncertain.
While members of Congress have proposed various solutions to address the funding crisis, there is yet to be a consensus on the best course of action. Proposals range from cutting benefits now to save more money later, to increasing the payroll tax or raising the retirement age.
"Any cut to Social Security benefits is going to be met with negativity," Beene warned. "In this situation, knowledge is power. Voters have to know about cuts in order to vote accordingly and have their voices heard to legislators who can make a change."
A separate survey from MassMutual found that 40% of near-retirees anticipate that Social Security benefits will be their primary source of income in retirement. Despite this, over a third believe their retirement income will not last more than 10 years.
"Seniors or those nearing their golden years are starting to get a bit apprehensive about would they have enough to make it through retirement," said Nadia Vanderhall, a financial planner at The Brands and Bands Strategy Group. "Americans are living longer while things are becoming more expensive."
However, not all finance experts are convinced that Americans are prepared to make the necessary financial sacrifices now, either through higher payroll taxes or benefit cuts, to ensure the future of the program.
"Americans realize that this needs to be addressed and quickly," said Kevin Thompson, a finance expert and founder and CEO of 9i Capital. "The question remains, are Americans today willing to 'bite the bullet' so to speak and take a few years of economic pain for long-term gain? The answer is likely no."
As the debate continues, Newsweek remains committed to challenging conventional wisdom and seeking out connections in the search for common ground.
Login