Social Security is by far one of the most popular government programs in the United States because it is critical for so many retirees’ financial security.
And it will be just as important for US adults who have yet to retire.
That’s also why so many Americans worry about how their benefits might change given that the program in less than a decade is expected to have a revenue shortfall. That would mean there would only be enough revenue coming in to pay a majority of one’s promised benefits, but not 100%.
More than half of non-retired US adults (53%) overall said they expect they will need to use Social Security to pay for necessary expenses, according to a new survey from Bankrate. Among those 60 and older — i.e., closest to retiring — 69% said they will be reliant on Social Security benefits, with 47% saying they expect to be “very reliant.”
That is below the 77% of current retirees surveyed who said they are relying on their benefits to pay for necessary expenses, according to the survey. Of that group, 62% said they are “very” reliant.
That shouldn’t be surprising. Social Security benefits only replace a portion of Americans’ pre-retirement income. Your savings (and pension if you have one) will have to make up the rest. And many Americans have not saved enough money or do not have a large enough pension to provide sufficient retirement income on their own.
“American workers have told us they feel behind on their retirement savings, and only about half say they believe they’ll be able to save as much as they’ll need. Social Security provides a vital backstop,” said Mark Hamrick, senior economic analyst at Bankrate.
Indeed, only 31% of the non-retired adults surveyed said they are not planning to rely on Social Security benefits in retirement, with just 14% saying they will “not (be) at all” reliant on them.
Figuring out how much you will get from Social Security
How much Social Security will replace for you depends on many factors, including your average career earnings over 35 years and the age you start collecting them.
Take people who are 54 today with average “medium” career earnings ($63,469 in 2022 per Social Security). Their “normal retirement age” is 67 for the purposes of collecting Social Security benefits. Under current law, if they retire in 2037, their promised benefits are estimated to replace 40.9% of their pre-retirement income, according to an analysis by the Social Security Administration.
But their payable benefits could be lower — replacing just 32.2% — if lawmakers make no changes to the program, which the Social Security trustees estimate will be taking in less revenue by 2035 than it promises to pay out.
And a majority of those surveyed by Bankrate — both non-retired and in retirement — expressed concern about getting their full promised benefits.
It’s unclear whether President-elect Trump will take action during his second term to resolve the shortfall — and, if so, what specific changes he’d support. But if he does address what’s known as the third rail in politics, it will likely be a politically fraught effort, given the program’s importance to all Americans.
But, changes or not, Social Security benefits are designed to provide a higher replacement rate the less you earn, a lower replacement rate the more you earn. For instance, according to the Social Security Administration analysis, that same 54-year-old person might see a replacement rate of between 55% and 76% if they’ve been a low-income earner (with career average earnings between roughly $16,000 and $29,000). Or anywhere from 27% to 34% under current law if they’ve been a six-figure earner on average.
When trying to figure out how much you will need to save for retirement, it’s helpful to get an estimate from the Social Security Administration that is based on your specific earnings history. If you haven’t received a paper statement from the agency for some time, you might sign up for an online account to access your estimates.
