More than half of Social Security recipients wouldn’t financially survive if they missed even half of a monthly payment, according to a new Nationwide Financial Survey.
The survey found that many Americans are at risk if the Social Security Administration’s proposed cuts come into effect.
Why It Matters
Social Security benefits are sent to more than 70 million Americans monthly. The SSA is set to run out of money for full payments in the 2030s unless Congress takes action.
What To Know
In the survey, which spanned responses from more than 1,800 U.S. adults, 14 percent of recipients strongly agreed that they wouldn’t be able to survive a missed payment, and 30 percent somewhat agreed.
Of respondents, 74 percent said they were worried about Social Security benefits running out at some point in their lifetime, and 83 percent expressed concerns over the SSA’s long-term viability.
In 2034, the SSA will face an automatic 19 percent cut to benefits based on the current money supply. That would translate to seniors losing around $4,573 a year, dramatically lowering the quality of life for many.
A U.S. Social Security Administration building in Burbank, California, as seen on November 5, 2020.
A U.S. Social Security Administration building in Burbank, California, as seen on November 5, 2020.
VALERIE MACON/AFP via Getty Images
The primary driver of the impending cuts is an aging population, particularly as baby boomers retire and a shrinking base of younger workers pays into the program. As a result, the Social Security Administration would only be able to pay about 80 percent of scheduled benefits unless funding solutions are enacted.
A prior Cato Institute report found that young workers will see a reduction equivalent to $110,000 of their lifetime earnings due to higher taxes and/or reduced benefits.
What People Are Saying
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “Those who rely 100 percent on their benefit to survive are the ones that are financially at risk given the fact that any cut would be detrimental to their finances. Cuts are only likely if Congress does nothing to sure-up the current deficits that exist. I don’t foresee cuts being likely although the current social security trust is set to be insolvent around 2033-34.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “There should be no surprise with these findings. The average 401(k) savings for most workers in the United States is drastically below the projected amount in retirement they would need, and even that average is inflated by higher earners being included; the median is far lower. The reality is most Americans don’t have enough saved for their senior years, and without Social Security, they wouldn’t stand a chance of making up the monthly gap needed to get by.”
What Happens Next
As inflation remains high and the economy becomes more uncertain, the fate of many current and future retirees depends on the solvency of Social Security, Beene said.
“In our current economic environment of inflationary pressures and future uncertainty, it’s become harder for most to set aside more money for future use, and their viability will be tied to the solvency of social security in future decades,” he said.