It’s no secret I’m interested in Social Security and its impact on my financial future. I even wrote 3 articles on the topic:
- Social Security (1 of 3) – Why?
- Social Security (2 of 3) – I Heard it’s Broke
- and Social Security (3 of 3) – How Much Will I Get?
I’ve worked full-time for 7 years and did some part-time work the 8 years prior to that. In 15 years participating in the labor market, I’ve made $600,000 and paid $35,000 in Social Security taxes, which means 1 entire year of my 15 has gone to Social Security taxes.
What Will It Get Me?
I’ve burned an entire year of work funding Social Security. I don’t think I’m crazy for wanting to know what that will get me.
There’s a lot of rhetoric about Social Security being broke, but it’s a little misguided. All things remaining equal, Social Security will only be able to pay about 75% of promised benefits beginning in 2035. That’s not good, but it’s not nothing.
My suspicion was that other people my age had opinions on Social Security, but maybe weren’t basing those opinions on facts. Since I’m technically a millennial, that’s the crowd I appealed to in the poll.
Not surprisingly (ok a little surprisingly) over half of respondents expect to receive absolutely nothing. Only 25% of survey takers expect to get more than $600 a month.
If you earn $35k a year for 30 years your calculated benefit is $1,300/month. If absolutely nothing is done to fix Social Security, your actual benefit will be $975/month.
To get your benefit below $600 a month (at a 75% funding rate), you’d have to only make $14k a year for 30 years. $14k a year! Despite the math, 75% of respondents believe they’ll get less than $600.
The $0 Crowd : 56%
It was important for me to distinguish between someone expecting to get $1 and someone expecting nothing. Voting “$0” essentially means you don’t expect Social Security to exist. Social Security going away seems absolutely impossible to me. Too many older people rely on it and too many working people can’t be trusted to save adequately for their old age. Social Security is just that, security against our society having to bear the burden of individually supporting an aging destitute population.
Does the $0 crowd think Social Security will be replaced by something else? That seems plausible to me. Maybe people voted this way because they think Social Security will be replaced by a guaranteed income, which I suppose would mean you technically don’t receive anything from Social Security.
I’d be very curious to know why over half of people voted this way. I’m stumped.
$1-600 : 19%
While I don’t agree with this group I definitely understand them better. If you voted <$600 it means you believe Social Security will continue existing, but that it’s irreparably broken. Worse than broken, you think it’s going to get worse! Or maybe you think the intention of the program will change – instead of being the primary source of income for most older people it will act more like a supplement to individual savings.
$600-1200 : 12%
You believe the program will exist but that major problems lie ahead. You might be aware of the looming 25% shortfall and probably don’t trust those figures. Millennials distrusting the government? Say it ain’t so.
I’m borderline in this camp. While my calculated benefit will definitely outpace this I wonder if there might be some sort of saver’s penalty instituted. My wife and I are fortunate to earn a lot of money and consequently we save a lot. At some point I think there will be public backlash against “rich” people collecting Social Security. A likely outcome would be to limit the benefits of people with large 401ks or other nest eggs. In this way prodigious savers would be penalized.
That’s entirely conjecture. I’ve never actually heard such a plan proposed, but it seems within the realm of possibility.
>$1200 : 13%
I’m going to sound smug here, but this feels like the crowd that did their homework.
According to the most recent figures, the average Social Security benefit for retirees is $1,360. It follows that around 50% of people should have voted this category in our poll. Why the major discrepancy?
I really enjoyed seeing the poll results come in – Thank You to the 381 people who voted!
I expected the majority of millennials to have a foul view of Social Security, but I had no idea it would be so pessimistic. I’m torn between feeling like I’m missing something and feeling like many people have read the headlines and not the details on Social Security. As in all things, it’s probably a little bit of both.
The looming Social Security shortfall is a very serious matter. It’s a big deal. But the extent of the problem has definitely been sensationalized. I’m cautious to be too optimistic though – if you can call a 25% benefit cut optimism… I certainly don’t pretend to have a full grasp of the fears and concerns facing this (my) generation.
At any rate, I hope it inspires some thought and causes you to look more closely at your own situation. Social Security taxes are taking a steady piece of your paycheck, it’s probably wise to consider what you’ll be getting for it.