[The Nation] The United States is in the early stages of a crippling retirement crisis. Nearly half of all private-sector employees in the country—some 58 million people—had no company-sponsored retirement plan in 2018. As recently as 1999, only 39 percent of retiring workers were in this predicament. The retirement situation in the United States isn’t just bad; it’s getting worse with each passing year.
The crisis engulfs all kinds of workers: blue-collar teamsters, high-skilled professionals working for profitable corporations like Verizon and United Airlines, and public-sector civil servants in cities plagued by budget crises (read: Detroit). Many have lost their health insurance and pension benefits—and in some places, they’ve even been ordered to return payments that were miscalculated by pension authorities years in the past. An increasing number of people now work at jobs that never offered pension plans in the first place.
But it doesn’t have to be this way. We can face this country’s looming retirement crisis — and we can do something about it.
[Cross-posted from CBPP] Discussions of Social Security often pit younger workers against older retirees, but Social Security is actually an intergenerational compact that helps Americans of all ages — which explains its enduring popularity among all generations. There are 73 million millennials (now aged 23 to 38), most of whom are working, and they already benefit from Social Security in many ways and will continue to do so as they age.
Here’s what they should know:
Many millennials have already benefited from Social Security. About 9 percent of millennials have received Social Security child benefits because a breadwinning parent died, became disabled, or retired, we’ve found. Those benefits lifted millions of those children out of poverty. Today, many millennials also receive benefits due to a life-changing disability or a spouse’s death, including about 360,000 disabled workers and 20,000 widowed mothers and fathers.
Millennials will need Social Security — maybe sooner than they think. A young person starting a career today has a 1 in 3 chance of dying or becoming disabled before reaching Social Security’s full retirement age, which is rising to 67 in 2022. But many millennials don’t have adequate private life and disability insurance coverage, which Social Security provides. Roughly half of millennial households have no private life insurance coverage, our analysis of the Survey of Consumer Finances data shows. But 95 percent of workers have survivors insurance coverage from Social Security, which is equivalent to a life insurance policy worth over $725,000 in 2018 for a young worker with average earnings, a spouse, and two children, according to Social Security’s actuaries.
Social Security will likely provide most of millennials’ income in old age. Most of today’s seniors receive most of their income from Social Security, and millennials will likely need the program even more.Millennials are much less likely than their parents to have traditional pensions, and not all of them are lucky enough to have a retirement savings plan at work, or an employer match if they do. Just a third of working millennials participate in an employer-sponsored retirement plan — while half of Generation X and baby boomers do — and their total wealth is lower than that of the previous generations at the same age. Social Security will be most millennials’ only guaranteed source of retirement income, not subject to investment risk or financial market fluctuations.
Social Security’s intergenerational benefits help millennials achieve financial independence. Rising higher education and child care costs, combined with slower earnings growth, create more financial pressure for millennials than their parents likely experienced as young adults.In addition to the Social Security benefits they earn themselves, the program helps relieve millennials of the responsibility to support parents or other family members when they retire or become disabled, or when a breadwinner dies. Because these family members have Social Security, millennials can use their incomes to establish households, have children, pursue education, and start businesses. Social Security is especially important for families of color, who have lower earnings, less workplace pension access, and higher rates of disability and premature death, on average.
Millennials are willing to pay more to strengthen Social Security — and the contributions required are manageable. Seven in 10millennials agree that it’s crucial to preserve Social Security, even if it means contributing more — and, like Americans of all ages, their first choice would be to lift the cap on wages subject to payroll taxes, which is now $132,900. Even if policymakers filled Social Security’s entire long-term shortfall by raising the combined 12.4 percent employee/employer payroll tax rate for all workers, it would cost a typical worker earning $50,000 another $25 per biweekly paycheck, matched by another $25 from his or her employer.
Fixing Social Security’s finances will likely boost millennials’ confidence in the program. Millennials are famously anxious about whether Social Security will exist when they retire — which is unfounded but not surprising, since millennials have heard myths about the program’s future their entire lives. In fact, Social Security is adequately financed in the short term and faces a modest long-term shortfall of about 1 percent of gross domestic product (GDP). Policymakers should strengthen Social Security’s finances mostly by raising its revenues, because Social Security benefits are modest even though, as noted above, they comprise the principal source of income for most beneficiaries. Strengthening the program’s finances could help put these myths to rest, so millennials can feel more secure about their Social Security.
Social Security isn’t going bankrupt. Even after 2034 (when the Trust Fund is projected to be fully depleted) benefits will still be paid — but it may not be able to pay all of what retirees put in and were promised. And that, according to many polls, is very important to many Americans both young and elderly.
What to do? In short, there are two options: 1) increase revenues or 2) cut benefits. But figuring out which is fairer — and most likely to make it through Congress — is something economists, politicians, and policy makers have all disagreed on.
The Atlantic’s Bouree Lam explores some of the most frequently posed policy solutions for Social Security in this handy explainer. Keep it nearby for the upcoming Democratic Primary Debate!
Before you answer that question, consider what Mark Hulbert, columnist for MarketWatch, has to say:
The future is unknowable, and uncertainty can certainly be scary. But in a ranking of things to worry about, I would place a number of other uncertainties far higher than whether Social Security “will be there for me.” How will the stock market perform over the next few decades, for example? Is much higher inflation about to rear its ugly head? Where are interest rates headed?
The impact of a wrong answer on any of those questions is definitely something worth worrying about.
In the meantime, it’s simply not accurate to say there is a Social Security crisis, in the sense of “a sudden change” or a “turning point,” to quote the standard dictionary definitions of crisis. There is nothing about Social Security’s finances today that hasn’t been known for decades.
In fact, Andy Landis, author of “Social Security: The Inside Story” and a former Social Security Administration representative, tells me that in 1983, after the last time Congress made changes to Social Security’s funding mechanisms, its actuaries projected that the system would be able to meet all obligations until the mid-2030s. So it’s hardly a surprise to “discover” today what has been known for four decades. There’s no more of a Social Security funding “crisis” now than at any point since the mid-1980s.
It is true that, unless further funding changes are instituted, the Social Security trust fund will need additional funding in 2034. Note, however, that this prospect is analogous to the situation that faced Social Security in the early 1980s; like now, for many years before then, projections had shown that the system would eventually run out of money. The 1983 amendments to Social Security, which resolved the funding shortfall, weren’t finally approved until just four months before when the system would otherwise have run out of money.
Featured Speakers: Representative Pramila Jayapal, United States Congress (WA-7) Larry Brown, President, Washington State Labor Council Teresa Mosqueda, Seattle City Council Member, Position 8 Alex Lawson, Executive Director, Social Security Works Xochitl Maykovich, Organizing Director, Washington CAN!
Special Guest: Jon “Bowzer” Bauman (formerly of Sha-Na-Na)
Musical Performance: Seattle Labor Chorus
Emcees: April Sims, Secretary-Treasurer, Washington State Labor Council Senator Joe Nguyen, Washington State Legislature, 34th District
Sponsored By: Abracadabra Printing American Federation of Government Employees Local 3937 American Federation of State, County and Municipal Employees Council 2 American Federation of State, County and Municipal Employees Council 28 American Federation of Teachers – Washington Bremerton Metal Trades Council Economic Opportunity Institute International Association of Machinists District Lodge 751 and 134 in Gladstone Oregon and Local 2202 ILWU Pensioners Kitsap Central Labor Council National Organization for Women, Seattle Chapter Pierce Central Labor Council Puget Sound Advocates for Retirement Action Puget Sound Advocates for Retirement Action Education Fund Physicians for a National Health Program Western Washington Retired Public Employees Council 10 and Subchapter 3 and 12 Service Employees International Union 775 and SEIU WA State Council Teamsters Joint Council and Teamsters Local 117 United Food and Commercial Workers Local 21 Washington Community Action Network Washington State Assoc. Of Electrical Workers and IBEW 77 Washington State Labor Council Thalia Syracopoulos
If you’re a millennial, you may have been led to believe that you have a better chance of seeing a UFO or Bigfoot than receiving a Social Security check. In a recent survey, some 80 percent of millennials are concerned that they won’t be able to receive any Social Security benefits upon retirement.
With the steady drumbeat of dystopian disinformation flowing from Social Security’s opponents and many in the media, who could blame them? No wonder the young adults I talk to at town hall meetings across the country tell me the same thing: “Social Security will not be there for me when I need it.” Let me assure the U.S.’s young people that Social Security will be there for you in the future, if you fight for it now.
Don’t listen to so-called “entitlement reformers” who try to divide the generations by telling you it’s unfair that millennials “support” today’s retirees through Social Security payroll contributions. This ignores the fact that the program has always been a compact between the generations — and has provided Americans with basic income in retirement for more than 80 years. Social Security is the bedrock of the U.S.’s working and middle classes. We can’t allow conservative ideologues to erode it.
In fact, there is another path forward, championed by Rep. John Larson (D-Connecticut) and Democratic presidential candidate Sen. Bernie Sanders (I-Vermont), among others in Congress. Both have introduced legislation that would put Social Security on a solid financial footing for the future while providing a modest but much-needed boost in benefits. Each bill would adjust the Social Security payroll wage cap (currently set at $132,900) so that the wealthy would begin paying their fair share into the program.
President Franklin Roosevelt famously
remarked about attacks on Social Security, “It is an old strategy of
tyrants to delude their victims into fighting their battles for them.” We can
see that strategy at work today.
The “tyrants” are the billionaire class, ideologically opposed to
contributing their fair share to the common good, and the politicians they
finance. Those powerful forces are working surreptitiously to frame a narrative
that so-called greedy geezers are to blame, selfishly taking for themselves at
the expense of their grandchildren. Former Senator Alan Simpson (R-WY), who has
used the term “greedy geezer” so often that many think he coined the term, said
about seniors fighting cuts to Social Security, “[W]ho are the people howling
and bitching the most? The people over 60… Those people… don’t care a whit
about their grandchildren… not a whit.”
The goal of Simpson and his billionaire cronies is to convince younger
generations to fight older generations over scraps, rather than joining
together to demand more. A recent Twitter kerfuffle exemplifies the strategy to
“delude their victims into fighting their battles for them.” Earlier this
month, a story aired
on NBC Nightly News about the Senior Citizen Education Program at the
University of Minnesota. This program allows senior citizens to take college
courses for only $10 a credit. Many people, particularly on Twitter, were
outraged at the story. Why, they asked, are seniors taking classes for a
nominal fee while young people are buried under a mountain of student debt?
That’s the wrong question. The right question is, how can Americans of all
generations come together to fight for greater economic security for all of us?
That includes expanded Social Security; tuition-free college and cancellation
of student debt. The truth is that younger workers are going to rely on Social
Security even more than today’s retirees. The truth is that seniors are better
off if their grandchildren can start their adult lives debt-free.
The truth is also that, the University of Minnesota’s program aside, seniors
across the country are in fact trapped by student debt along with their younger
counterparts—and are even having their hard-earned Social Security benefits
garnished to pay off those debts. According to the Consumer Financial
Protection Bureau, student debt is an increasingly
heavy burden on seniors. In 2005, 700,000 Americans aged 60 and older had
student debt. By 2015, that number quadrupled to 2.8 million—and it’s no doubt
considerably higher today. Seniors owe
over $86 billion in student debt.
In many cases, this debt comes from helping their children (or
grandchildren) attend college. Our broken system forced these seniors to choose
between their own retirement and their children’s futures, and they picked
their children. For the crime of wanting their family to live out the American
Dream, they are condemned to decades of poverty.
In other cases, this debt comes from going back to school themselves,
relatively late in life. Many people, particularly women, face ageism
in the workplace as early as their 40s. Employers don’t want to pay the higher
salaries that more experienced workers command, and they especially don’t want
to pay higher health care costs (one of many reasons we need to enact Medicare
for All).
Those laid off in midlife often chose to go back to school to gain new
skills. In the process, they incur student debt that will follow them for the
rest of their lives. Instead of a source of outrage, the University of
Minnesota program should be a source of inspiration. It should be a model for
what we need to offer everyone, of all ages.
Thomas Paine, a founding father of our nation, proposed
that all young people be given a lump sum payment at the age of 21. Paine
rightly saw that not only should people start adulthood free of debt, but they
should also start with some property.
Tuition-free public college does not go as far as Paine’s vision, but it is
an important start. People should be starting their adulthood with assets, not
burdens. In the wealthiest country in the history of the world, everyone who
wants an education should be able to get it without being shackled to debt for
decades.
Furthermore, we must act aggressively to protect those who are already
caught in the student debt trap. Senators Ron Wyden (D-OR) and Sherrod Brown
(D-OH) have introduced the Protection
of Social Security Benefits Restoration Act, which would stop the federal
government from garnishing the Social Security checks of people with student
debt. Passage of this bill would be an important first step. But we must go
further.
This week, Senator Bernie Sanders (I-VT), Congresswoman Pramila Jayapal
(D-WA), and Congresswoman Ilhan Omar (D-MN) introduced a college
affordability package. The package makes public colleges and universities
tuition-free for all who attend and cancels all student debt.
In the fight to pass these wise proposals into law, we must be ready for
Roosevelt’s “tyrants,” who will seek to use their money and influence to thwart
the common good. They have always been with us and probably always will.
In the 19th century, the nation recognized the importance of public
education. In response to the idea, John Randolph, a Virginia politician and
wealthy landowner, argued against universal public schools, claiming it would
perniciously “ease individuals of their natural and moral obligations” to take
responsibility for the education of their own children.
Today, you hear similar arguments about the moral obligation of paying off
the outrageous debts incurred for the “crime” of higher education. Just as our
forebearers made public K-12 education a right, we must make public college a
right despite the objections of modern-day John Randolphs. We must cancel the
debt of those of all ages who find themselves caught in the student debt
crisis. And we must be on guard against those who seek to divide and conquer
us.
The reality is that, in the 21st century with its technological advances,
today’s work often requires more than a high school diploma. Like free high
school, there should be free college as well. It only makes sense that those
who have been caught in the web of unaffordable college now have those debts
canceled.
Expanding Social Security, tuition-free public college and the cancellation
of student debt should not pit one generation against another. All of us are
better off if grandparents have dignified and secure retirements, and
grandchildren are well-educated, starting adulthood debt free. If we can join
together to ensure that the wealthiest among us pay their fair share, all of
that is within reach.
This article was written by Nancy Altman and produced by Economy for All, a project of the Independent Media Institute.
