Social Security’s realities can be an eye-opener for some. - 24wallst.com; Cato Institute
“Unfortunately, although many Boomers will rely on Social Security to help them cover essential (retirement) costs, many members of this age group simply don’t know the truth about this benefit program or what it can do for them.” That’s the opening line in a 24wallst.com post by contributor Christy Bieber, and it points to observations from a Cato Institute poll assessing the Social Security knowledge levels of this primary population cohort.
The “truth” (truths, actually) addressed in Ms. Bieber’s post (The Social Security Reality Baby Boomers Were Never Fully Told) is that more than half of the Cato poll respondents lack understanding of how Social Security is funded, while nearly a quarter believe that the payroll taxes they’ve contributed are held in a personal account reserved just for them. Similarly, fewer than half of those surveyed considered Social Security’s purpose to be a poverty-prevention program for low-income seniors, instead believing its purpose is to replace preretirement income. Interestingly, the poll revealed this difference of opinion on Social Security’s purpose as a divide between Gen Z (those born between 1997 and 2012) and Baby Boomers, with more than half of younger respondents considering Social Security to be one of the ways to ensure poverty avoidance for older Americans.
Other points raised in Ms. Bieber’s post concern a lack of appreciation for Social Security’s cost-of-living adjustment (COLA) process and the reality of its income-replacement objective. In general, none of this is surprising, given Social Security’s long-running, quiet success as a social insurance program and its automatic assurances that benefits will be there at the point of retirement. That’s no longer the case, as anyone who follows the news is keenly aware: Social Security is rapidly depleting its trust fund reserves and headed for a 2032 cliff. The general lack of understanding about Social Security’s structure is slowly dissipating as more and more people wake up to the program’s financial trajectory, and as articles like Ms. Bieber’s populate cyberspace.