Social Security is a central pillar in retirement security for current retirees and baby boomers.
Younger generations are predicting a different outcome.
More than 60% of current retirees say their monthly Social Security checks are the primary way they cover their expenses, while just 13% of millennials expect that to be their situation, according to Wells Fargo’s annual retirement study. (More than 3,700 people were surveyed in summer 2019.)
Millennials, and members of Generations X and Z, said they plan to rely more on their personal savings than on Social Security in retirement.
“Our survey clearly shows the stark differences between current retirees and younger generations and how they will fund retirement,” said Fredrik Axsater, head of the institutional client group for Wells Fargo Asset Management.
News headlines about a Social Security funding crisis have likely made younger people worry about depending on those monthly checks. Next year, for the first time since 1982, the program will need to start depleting its funds to pay retirees their complete benefit, according to the latest government projections. By 2035, the program will only be able to pay about 80% of promised benefits.
More than 70% of working people, across generations, said they were afraid Social Security will not be available in their retirement, Wells Fargo found.
More than 90% of respondents said they would feel “betrayed” if Social Security wasn’t available when they retire. Meanwhile, 8 in 10 people said retirement policy should be a top priority for presidential candidates.
Congress is taking steps to shore up the nation’s insurance program. The Social Security 2100 Act aims to extend the solvency of the program into the next century and increase retirees’ checks.
Even so, younger generations expect the money they’ve saved in their 401(k) plans and individual retirement accounts to be their main source of income throughout their post-working years, Wells Fargo found.
That might prove difficult, however.
While experts say people could need a $1 million nest egg, less than a third of baby boomers — some 10,000 of whom retire every day — had more than $250,000 saved up, according to Wells Fargo.
Nearly half of millennials didn’t even have $25,000.