A new Bankrate survey has found that many of today’s workers expect to rely on Social Security benefits, but most are concerned that they will not receive monthly checks upon retirement.
Despite expectations of needing these promised benefits, “the financial outlook for this popular program is cloudy,” said Mark Hamrick, senior economic analyst at Bankrate.
Nearly three-quarters (73 percent) of U.S. workers worry that the federal government will not mail monthly checks once they reach their winter years.
“There’s a vast divide between Americans’ concern about the looming Social Security funding shortfall and the lack of serious and thorough conversation among elected officials about what to do about it,” Hamrick said in the report. “The result is that the American public’s financial well-being is not being tended to.”
During his election campaign, President-elect Donald Trump vowed to eliminate taxes on Social Security benefits and pledged to “fight for and protect Social Security.”
Economists said the incoming administration’s proposal could exacerbate the scheme’s deteriorating finances.
Shannon Benton, executive director of The Senior Citizens League, said she has mixed feelings about the president-elect’s idea.
“We don’t believe that Social Security should be taxed,” Benton told The Epoch Times. “However, because the Social Security taxes do go right back into the Social Security Trust Fund, it’s a source of income for an already failing program.”
It is a balancing act between protecting Social Security and helping seniors, she said.
Studies have found that many American seniors are financially struggling in their retirement.
A September report by financial education website Bad Credit found that a quarter of retirees have had to return to work due to a lack of resources. A third of retirees said they do not feel financially stable and another third reported struggling to make ends meet after they retired.
Reforming the Social Security System
Surveys show that Americans are becoming concerned about the state of the Social Security system.Neither of the presidential contenders proposed changing Social Security. President Joe Biden, according to a White House budget fact sheet from this past spring, opposes “any proposal to cut benefits.”
Over the years, lawmakers have discussed various mechanisms to bolster the Social Security Administration’s finances. These have included raising the eligibility age, conducting means testing, and increasing the payroll tax cap.
According to Benton, her organization’s supporters favor forming a bipartisan commission comprised of officials “in the thick of it in government.”
“It’s always easy to see the problems but not so much the fixes,” she said.
Her group advocates for two ideas: switching the Consumer Price Index (CPI) used for adjusting benefits and providing a lump-sum makeup benefit for lost purchasing power.
The Social Security Administration’s current cost-of-living adjustment (COLA) formula depends on the CPI-W. This index tracks price changes in goods and services for urban wage earners and clerical workers, including food, transportation, and housing.
Benton recommends that the COLA rely instead on CPI-E, which measures expenses more likely to be reflected in seniors’ spending habits, such as health care expenditures and prescription drugs.
Current-law COLA—2.5 percent—will lead to an estimated monthly Social Security benefit of $1,976 in January 2025. Calculations with a hypothetical 3 percent COLA based on CPI-E would add an extra $9 to the average retired worker benefit.
One economist thinks taking a sledgehammer to the current system would be prudent.
Boston University economist Laurence Kotlikoff previously told The Epoch Times that the federal government could phase out Social Security while covering all accrued obligations to retirees and current workers. He also suggested eliminating Social Security’s earnings test, “which is trapping tens of millions of early retirees into poverty at a huge loss in federal tax revenues and national output.”
Kotlikoff suggested that the U.S. government could replace it with a progressive retirement account system comparable to Singapore’s.
The Singaporean government maintains a comprehensive retirement system called the Central Provident Fund. Employees and employers pay a portion of workers’ salaries into the system. The contributions are then divided into three accounts: Ordinary (housing, insurance, and education), Special (retirement), and Medisave (health care expenditures).
The United States was ranked 29th.