According to the Employee Benefits Research Institute, 70% of today’s retirees say Social Security makes up the majority of their income. Worker’s nearing retirement age (55 and older) are more likely than younger workers to believe that Social Security will provide the same amount of benefits as those received by today’s Social Security retirement beneficiaries . So what are the younger generations doing to prepare for retirement if they doubt the reliability of Social Security? Recent surveys have indicated how poorly the majority of American’s are doing at saving for retirement. Despite the reported insecurity in the Social Security system, many Americans appear to be defaulting to relying on Social Security as their primary source of income in retirement.
The Social Security Retirement program is projected to run out of funds at its current benefit rates in 20 years. This means that in order to maintain some minimum benefits for all Americans, benefits will have to be cut, taxes raised, or a combination of both. Already proposed by the current administration, the Chained CPI would alter the annual inflation calculation for Social Security benefits so that inflation would be calculated at a slower rate. It appears inevitable that changes are coming to Social Security.
What level of benefits do you expect to receive from Social Security?
Have you made changes to 401k contributions based on your confidence in Social Security?