Social Security Reform Splits Young Americans and Boomers

Younger generations in the U.S. are more likely to support cutting Social Security benefits for retirees to ensure the future sustainability of the program than older generations, according to a recent survey commissioned by Newsweek.

The poll, conducted by Redfield & Wilton Strategies on behalf of Newsweek between February 18 and 19, found that a 66 percent majority of Americans across all generations agreed that the Social Security program needs reforming, though they disagree on how to do it.

The Social Security program is facing a financing shortfall that has led experts to warn that the fund's reserves might become depleted in 2034, with recipients possibly receiving only 78 percent of their full benefits.

"The hard facts are that the system's revenues are insufficient to pay the full amount of scheduled benefits, starting in 2033," Gal Wettstein of the Center for Retirement Research at Boston College told Newsweek. "At that time, ongoing revenues are projected to be sufficient to cover roughly three-quarters of scheduled benefits. The only levers we can pull are revenue increases, benefit cuts, or some redistribution of benefits from one group to another."

A majority of 69 percent of respondents across all age groups opposed cutting benefits to those on Social Security, while 52 percent were against raising the retirement age and 44 percent opposed raising taxes on workers' income. The poll was run among a sample of 1,500 eligible voters in the U.S.

Baby boomers—those born between 1946 and 1964—and members of the Silent Generation–born between 1928 and 1945—were much more likely to oppose cutting benefits for recipients than the younger generations. Only 3 percent of boomers supported such reform against 11 percent of Gen Xers—born between 1965 and 1980— 20 percent of millennials—born between 1981 and 1996—and 30 percent of Gen Zers—born between 1997 and 2013.

The generations were more aligned in their opposition to raising the retirement age (opposed by 41 percent of Gen Zers, 53 percent of millennials, 46 percent of Gen Xers and 53 percent of baby boomers and members of the Silent Generation) and increasing taxes on workers (opposed by 36 percent of Gen Zers, 48 percent of millennials, 55 percent of Gen Xers and 38 percent of baby boomers and members of the Silent Generation).

Significantly, younger respondents to the poll were less likely to say Social Security will be important for them when they retire, with respectively 51, 44 and 32 percent of Gen Zers, millennials and Gen Xers saying that the program will be able to support them in their retirement against 52 percent of boomers and the Silent Generation. Across all generations, 44 percent of respondents agreed that Social Security benefits will support them in their retirement.

"Many young professionals think of Social Security as this ambiguous thing and aren't sure how it will affect their future," Northwestern Mutual Financial Advisor Kendall Bregenzer told Newsweek.

"They feel discouraged and have lost faith in the program because it's projected to run out of money," Bregenzer said. "The outcome is unknown, and this scares young professionals as they start to plan for retirement. However, working with a financial advisor can provide some grounded perspective and help people prepare for factors that are out of their control, such as changes to Social Security."

Northwestern Mutual recently published its own study, which found that more than four in 10 Americans (42 percent) can imagine a time when Social Security no longer exists, especially young people.

"When it comes to younger generations, Gen Z and millennials anticipate Social Security delivering significantly less in terms of overall retirement funding compared to boomers," Bregenzer said. "People crave stability with their finances, and the lack of clarity around Social Security is generating financial anxiety. However, younger generations have time to adjust and plan ahead, which could minimize Social Security's impact on their retirement income."

Wettstein told Newsweek that younger generations are generally overly pessimistic about the Social Security system.

"Many polls show that large segments of young adults believe that they will receive no Social Security benefits whatsoever, which is highly implausible," he said. "Again, even if no policy action is taken, revenues are projected to be sufficient to cover roughly three-quarters of scheduled benefits."

For Wettstein, one reason for this pessimism "may be a concern that policymakers might hold older, current beneficiaries harmless even as they shift the burden to younger, current workers," he said, adding that a large part of the shortfall in Social Security is attributable to debts incurred by early cohorts of recipients who are mostly dead by now.

"The early cohorts received benefits far in excess of their contributions and we are burdened by this legacy debt to this day," Wettstein said, adding that younger generations should beware of the impact that cutting benefits could have on them.

"It is important to understand what the alternatives to Social Security are: If individuals will save more to compensate themselves for benefit cuts, this may benefit their heirs when some inevitably die without exhausting their assets [although those benefits would likely tilt towards the children of the wealthy more than the current system]," Wettstein said.

"But, if people end up not saving enough to sustain themselves with lower Social Security benefits, that could in turn place an even greater burden on their children to care for them financially. As is often the case, it is not straightforward to understand who the winners and losers of a complex policy change will be."