4 in 5 young workers think they won’t receive ANY benefits from Social Security
Alternative headline: Young people paying more attention than we give them credit for.
Overall, six in 10 workers think they won’t receive any benefits from Social Security, but the breakdown by age is very telling.
Now, liberals like to claim that Social Security is fine, because it has a trust fund of $2.5 trillion. But in a way only government could manage (without getting arrested like Bernie Madoff), the trust fund is “worth” $2.5 trillion, but that’s $2.5 trillion is in treasury notes, which will have to be paid back by the same federal government that’s running a $13 trillion deficit and has unfunded liabilities in other federal programs of over $100 trillion.
Cato’s Michael Tanner explains:
Thanks to the economic downturn, Social Security is running a temporary cash-flow deficit today. That deficit will turn permanent in just six years. Of course, in theory, the Social Security Trust Fund will pay benefits until 2037. That’s not much comfort to today’s 35-year-olds, who have faithfully paid into the program their entire working lives but will face an automatic 27 percent cut in benefits unless the program is reformed before they retire.
But even that figure is misleading, because the Trust Fund contains no actual assets. The government bonds it holds are simply a form of IOU, a measure of how much money the government owes the system. It says nothing about where the government will get the money to pay back those IOUs.
Even if Congress can find a way to redeem the bonds, the Trust Fund surplus will be completely exhausted by 2037. At that point, Social Security will have to rely solely on revenue from the payroll tax – and that won’t be sufficient to pay all promised benefits. Overall, the amount the system has promised beyond what it can actually pay now totals $15.8 trillion.
Moreover, Social Security taxes are already so high, relative to benefits, that Social Security has simply become a bad deal for younger workers, providing a low, below-market rate of return. Many young workers will end up paying more in taxes than they receive in benefits. They will actually lose money under the program.
And contrary to widespread belief, workers do not actually own their Social Security benefits. They are left totally dependent on the goodwill of the 535 politicians in Congress to determine what they’ll receive in retirement. Benefits are not inheritable, and the program is a barrier to wealth accumulation. The program unfairly penalizes African Americans, working women, and others. In short, it is a program crying out for reform.
Some may say it’s extreme to want to change Social Security, but if we don’t reform, revise or privatize it, Social Security will eliminate itself under a crushing burden of debt and promises the government can’t pay for.
At least most young people know it’s coming.