The fate of Social Security worries average Americans

The fear that Social Security will one day be obsolete has existed for decades, but the notion has become increasingly possible in recent years. The Social Security Administration expects the program to remain unchanged until 2035, after which only about 75 percent of scheduled benefits will be covered.

Although the federal government has argued that Social Security will exist in some form for the long term, most Americans worry that it will collapse before they can cash in.

Related: The average American faces a major retirement 401(k) dilemma.

Atticus, a law firm that specializes in helping clients receive government insurance and benefits, recently released a new report detailing public concern about the fate of Social Security payments.

The study found that many Americans are proactively adjusting their finances in anticipation of reduced payments.

Workers are changing their retirement strategy to prepare for the loss of Social Security

Despite assurances from the federal government, 83 percent of Americans believe Social Security funds will be cut over the next decade, and 63 percent believe payments will disappear entirely by 2035.

Since retirees collectively receive more than $100 million in benefits each month, it makes sense that three in four Americans (73%) believe that running out of Social Security would have a direct impact on their financial planning and retirement strategy.

More about social security:

• The report on Social Security benefits confirms that big changes are coming
• Medicare changes will hit your wallet in 2025
• How average Americans can better plan for their 401(k), retirement income

Increasing savings, reducing spending, and increasing 401(k) and IRA contributions are the most popular ways workers are preparing for the possibility of a defunct Social Security program. However, this approach varies by generation:

• Baby Boomers they are most likely to cut back on expenses and get a part-time job during retirement.
• Gen X are most likely to adjust their retirement age.
• Millennials are most likely to increase contributions to pensions and savings,
• Generation Z are most likely to increase savings contributions and seek financial advice.

Adi Sachdeva shares information on behalf of Atticus. “The most striking finding in the data is how different demographics plan for when Social Security will run out,” she said.

“Millennials and Gen Xers are the most proactive in their approach to retirement, with the majority of contributions increasing to savings accounts and retirement accounts,” she continued. “Meanwhile, baby boomers who are nearing or already in retirement are focusing on reducing expenses and/or working part-time during retirement.”

“This shows a clear generational divide in how Americans are rethinking their financial plans: younger generations are taking a more aggressive approach to long-term savings, while older generations are choosing to make immediate changes to their current financial habits. ”

A couple is seen talking to an advisor about retirement planning.

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Americans want the federal government to prioritize preserving Social Security

Half of seniors rely on Social Security as one of their primary income streams in retirement, highlighting how failure of Social Security could spell financial ruin for most retirees. With a devastating outcome looming, many Americans are pressing for the government to take action.

87% of Americans want the government to protect Social Security regardless of any impact on the national deficit. However, raising taxes on high earners (40%), raising the full retirement age (35%) and implementing new taxes (28%) are the most popular measures among workers.

Related: Dave Ramsey Explains How to Thrive in a Fulfilling Retirement

Although usually unpopular, creating new taxes or increasing current taxes can be the most effective way to make up for the shortfall caused by retiring baby boomers and a smaller workforce to pay into the system.

The Center for Retirement Research at Boston College found that if payroll taxes were raised 3.6 percent from the current 12.4 percent contribution to Social Security, the U.S. federal government could pay Social Security benefits up to 2097 – and could even generate a year’s worth of reserve.

Given its broad implications, the future of Social Security has become a topic of political discussion affecting voters of all ages and both parties.

Nearly two-thirds (61%) of Americans are not confident the government will take action to maintain Social Security, and 64% say the candidate’s position on the program will affect their vote in the 2024 election.

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