While the coronavirus pandemic has caused financial problems for many American households, a majority of people across all generations are becoming increasingly worried about whether they will be able to count of Social Security as a reliable source of retirement income.
About 61 percent of people said they were more worried than before about the program running out of funding, according to a new survey conducted by The Harris Poll on behalf of The Nationwide Retirement Institute.
A majority of millennials, baby boomers and Generation Xers said they thought cuts would be made to benefits under the current administration.
More than one-quarter of people say that they plan to change when to file for benefits as a result of the pandemic.
Overall, people had some misconceptions about the program. A surprising number of people -- 97 percent of millennials and 90 percent of Gen Xers -- did not know at what age they would be eligible for full benefits, and many incorrectly believed that if they claimed benefits early – those benefits would increase automatically when they reach full retirement age.
From a broader perspective, the pandemic has caused about one-in-five people to expect to retire later than planned, and many also feel they will need to continue working in their older years because Social Security will not provide enough support.
An analysis conducted by researchers at the Penn Wharton Budget Model showed that Social Security is at risk of running out of funds as many as four years earlier than anticipated – in 2032 – depending on the shape of the U.S. economic recovery.
A decline in payroll taxes is expected to be primarily responsible for draining Social Security’s coffers more quickly, given the dramatic rise in unemployment. Low interest rates also affect reserves, as they reduce income on bonds held by the fund.
Lawmakers appear to be aware of the extent to which the pandemic may affect the trust funds for some of the country’s most popular programs.
In the Republican-sponsored HEALS Act, detailed by lawmakers this week, there is a section that sets up a process whereby the Treasury will report on the status of the programs – and lawmakers will then form committees to identify find ways to fix those issues.
The annual trustees’ report did not take the effects of coronavirus into account when it estimated that the program’s reserves would be depleted by 2035. At that time, levies were expected to be sufficient to cover 79 percent of scheduled benefits.
As of March, more than 69.4 million people were receiving Social Security, Supplemental Security Income or both. The average benefit was $1,387.26.