Social Security Still Troubles Young and Old

Just a few years ago, Social Security reform was a hot topic among the young and politically minded, says Ashley Killough, a graduating senior at Baylor University in Texas.

Many wondered if the whole system, perennially labeled as a program in crisis by policy analysts across the political spectrum, would collapse by the time they reached retirement age. As former President George W. Bush aggressively pushed to allow workers to put some of their Social Security money into personal accounts, their interest was piqued. A major overhaul—even partial privatization—looked possible.

The plan to privatize failed, of course, and a few years later the economy began to slide. Now, says Killough, Social Security reform is barely a concern for her or the young people she knows. Instead, their most pressing problem is finding jobs in a recession economy.

The economic crash of 2008 may have temporarily pushed Social Security reform largely off the national agenda, but scratch the surface a bit and you’ll see that the same fears, issues and generational tensions about the system still exist—and may even be exacerbated by the current economic climate.

A January poll conducted by the Pew Research Center for the People & the Press found that the public has certainly not forgotten about the issue. Respondents ranked Social Security their fourth-biggest concern, behind jobs and the economy but ahead of energy, health care and the deficit. Sixty-three percent said it should be a top priority for the president and Congress, down just 1 percent from the previous three years.

“While Social Security may not be the number one priority right now because everyone is focused on getting through the recession, it’s definitely not something we can leave on the back burner,” says Killough.

Last year, Social Security’s trustees projected a shortfall of more than $4 trillion, and current trends indicate the program will begin running a deficit in a dozen years.

“With [my] parents’ generation being much larger than [my] generation, we’re going to have to either cut benefits or raise the Social Security tax,” says Killough. And that troubles her, as it does many of her Gen-X and millennial peers, who were born after 1981.

“I’ve pretty much always assumed that Social Security would be depleted by the time I qualified for it,” says Jeff Simmons, a 27-year-old personal trainer in Colorado. “I’m just trying to have a good [individual] retirement plan, and hopefully a good mutual fund and savings account.”

Joshua Noyes, a 27-year-old IT worker in St. Louis, echoes this. “I am not relying on Social Security at all for my retirement planning,” he says. “If there’s any money left when I’m ready to retire, I’ll take it, but I plan on having a hefty retirement fund that I’ve saved and invested on my own to live off of.”

Their attitudes are congruent with the findings of a 2008 study about the younger generations and financial planning. Sponsored jointly by the American Savings Education Council and AARP, the study found that 41 percent of millennials and Gen-Xers expected their largest source of retirement income to come from an employer-sponsored savings plan, such as a 401(k). Only 7 percent believed Social Security benefits would provide the bulk of their retirement income (compared with 17 percent of nonretirees 40 and over).

It’s hardly surprising to find pessimism about Social Security among a generation of Americans who have grown up hearing warnings that the program is in peril. As early as 1978—long before his executive branch push for private accounts—George W. Bush warned during a Texas congressional run that the program was headed for trouble.

“Most people [my] age see the program as a miserable failure,” says Noyes, who expresses frustration with older voters for being what he calls insufficiently aware of or concerned about the program’s failures.

Simmons also believes that older generations, particularly boomers, are the cause of Social Security’s likely shortfall. But he’s not interested in assigning blame. Rather, Social Security’s dwindling returns are just an inevitability he’s learned to accept.

“I think we all share in the responsibility and blame for the Social Security system,” says Ron Killough, Ashley’s father. Ron, a 62-year-old pastor and education minister at First Baptist Church of Celina, Texas, is delaying retirement until age 70, in part so he can receive a bigger monthly Social Security check.

“We have all allowed this to happen,” he says. “I don’t think [Social Security] will even exist in 40 years, let alone be robust.”

According to an ABC News/Washington Post poll, only 11 percent of Americans of all ages are very confident they will get Social Security benefits throughout their retirement.

“The current system is way past broken,” says Alvin Lee, 57, a training consultant in Princeton, N.J. “And unfortunately, we don’t want to make tough choices.”

Broken, or simply ailing?

What exactly these tough choices are remains unclear. Should Gen-Xers and millennials argue for a complete overhaul? Or can the system be sustained with less drastic measures?

Some economists, such as Paul Krugman and Dean Baker, have argued for years that the Social Security system isn’t in crisis and can be fixed with a few minor tweaks. President Obama’s Office of Management and Budget director, Peter Orszag, agrees.

David Certner, AARP’s legislative policy director, points out that “in 1983, with Social Security facing insolvency that was six months away, we were able to agree on a balanced package to put Social Security on a sound footing well into this century. Now, with over 30 years of solvency still remaining, we certainly should be able to agree on a similar package today—and the sooner we act, the more modest the changes will be.”

The question is: How long before such “tweaks” can be enacted, given the economic crisis the new administration and Congress face? In mid-February the president scuttled plans for a task force dedicated to rethinking and reforming the program. His initial address to Congress mentioned only a vague desire to create “tax-free universal savings accounts for all Americans.”

Others, including some in the younger generation, continue to champion privatization.

Noyes, for one, calls Social Security “nothing more than an entitlement wielded by Congress to purchase votes” and supports privatization as a way of wresting control from the politicians he believes are responsible for its failures.

“It’s far riskier to allow government bureaucrats to manage billions of dollars in assets than to allow a well-experienced broker to do the same,” he says. “Even with the current economic problems, I think most economists will agree that investment risk is actually pretty low when you invest with the long term in mind.”

But privatization supporters are in the minority, both among the general population and young adults. According to an October CNN poll, 62 percent of Americans of all ages think privatization is not the solution. And the continued dismal performance of the stock market may make the idea even less attractive.

The stock market crash has turned Jessica Grose off any reform that involves private accounts. The 23-year-old travel industry employee from Orlando, Fla., believes such a measure would endanger workers who reach retirement age during a recession—and she thinks the current downturn highlights more than ever the need for social insurance programs like Social Security.

“Everyone should invest on their own, but I think having a program like Social Security that mitigates risk is a good idea,” she says. “I’m happy to be helping retirees now.”

Ron Killough says it “saddens” him that his daughter and others her age won’t be able to enjoy the benefits of Social Security that his generation has. But he also feels “some optimism.” Perhaps, he says, “a better system might be in place” by the time Ashley retires.

Peter Suderman is a writer in Washington, D.C.