Last week we spoke with San Francisco Millennials about Social Security. What are their thoughts? Will Social Security exist when they retire? Is it a fair program? How do Millennials plan for retirement? Watch the video below to hear their thoughts.
Social Security is a complex issue. It’s not something taught in schools. Millennials admit being under informed and lean more as they enter the workforce, but they also worry the program isn’t sustainable. They see money being taken from their paycheck and many doubt they’ll get it back.
Here are five facts about Social Security to help you better understand the issue:
1. Benefit payments are declining. In 1960, the average-earning male aged 65 received $6.39 in Social Security benefits for every dollar he paid in taxes. By 1980, this ratio declined to $2.12 for workers. In 2010, workers age 65 received 92 cents for every dollar paid in taxes. By 2030, workers will only receive 84 cents for every dollar paid in Social Security taxes. (Source: Heritage)
2. The money we are paying into today is being paid out today. This is no different than a Ponzi Scheme, where money from new participants is used to pay the old. (Source: Forbes)
3. Social Security payments add to our national debt. In 2013, Social Security paid out $71 billion more in benefits than it took in through taxes. That number is expected to hit $336 billion by 2033. (Source: PGPF)
4. The Federal government borrows money from pension programs like Social Security. This is called “Intragovernmental Debt.” In 2014, the US government only ran a $483 billion deficit but the national debt increased $1.034 trillion. Where does the other money come from? The government borrowed $551 billion from pension programs like the Social Security fund. Today our Intragovernmental Debt is over $5 trillion. (Source: Treasury Direct)
5. Social Security is called an unfunded liability. That means the government doesn’t currently have funds on hand to pay for all the money promised or paid in. How much are these unfunded liabilities? It’s estimated to be anywhere between $49 trillion and $210 trillion.
What do you think about Social Security? Is it the government’s job to save for citizens’ retirement? Do you think Social Security will be available when you retire? Should the program be privatized?
Please share your comments below, and a friendly reminder to be respectful of all opinions.