Will Millennials Receive Social Security Benefits?
Many are concerned retirement funds won't be available
If you're worried about the future of Social Security, you're not alone: 80 percent of Millennials are concerned that Social Security funds will not be available to them when they retire, according to the 18th Annual Transamerica Retirement Survey, published in 2017.
The good news is that the future of Social Security for Millennials will likely not be as bleak as expected. “Young people frequently ask: ‘Will Social Security be there for me?’" wrote Carolyn Colvin, former acting commissioner of Social Security, on the Social Security Administration’s blog in 2016. "I take this question very seriously, and I am sure Social Security will be there in the future.”
Although the Social Security Board of Trustees has reported that Social Security trust fund reserves will likely run out by 2034, it doesn’t mean that the program will come to an end. Even if the reserves run out, people and employers will still be paying the required Social Security payroll taxes. However, that money might only cover around 75 percent of expected future benefits, according to the Social Security Board of Trustees. In other words, if nothing changes, the amount of benefits paid out will likely be smaller, and a larger portion of Millennials' retirement funds will need to come from sources beyond Social Security.
How Much Social Security Money Will I Receive?
If you're a Millennial, it would be difficult at this point to determine exactly what Social Security benefits would be available to you and at what age you'd be able to access them.
A number of factors determine the amount of Social Security benefits you can receive, including how long you work, how much money you make each year, and the age at which you begin receiving benefits. Any future changes to related laws could also impact your benefit amount.
The age at which people begin to draw on Social Security has already changed, as have the amounts that are paid out each month. Considering this, it's safe to assume that you should not rely on Social Security entirely for your postretirement income.
Social Security and the Cost of Living
Another reason to make sure you have another source of retirement income is to look at what has been happening the purchasing power of the money that Social Security pays out. According to a 2017 study from the Senior Citizens League, Social Security benefits have lost 30 percent of their buying power since 2000, because the annual cost-of-living adjustment to Social Security payments has not been enough to keep up with inflation.
Each year, people who receive Social Security benefits usually get an automatic increase in the amount they receive, called the cost-of-living adjustment. In 2016, that increase was nonexistent, even though the annual inflation rate was 2.1 percent. In 2017, the cost-of-living adjustment was a mere .3 percent, although the annual inflation rate was 2.1 percent again. At this rate, it’s unlikely that Social Security benefits will catch up to cover the actual cost of living by the time Millennials retire.
If you want to retire comfortably, then work on creating a resilient retirement plan. Determine what and how you need to save now so that you can retire no matter what happens with Social Security.