Why pessimism on Social Security could come back to bite Millennials
Why does the word “old” come to mind for so many of us when the topic of Social Security comes up?
Retirement benefits are the biggest component of Social Security. But the program also is very important for disabled people of all ages, as well as surviving children and spouses of deceased beneficiaries. And perhaps most important, today’s young people will need Social Security every bit as much as today’s retirees and near-retirees – and probably more so if current economic trends persist.
Yet many young people have been conditioned to think they should not count on Social Security to be there when their time to retire rolls around. That is not surprising, considering the negative, often false propaganda uttered by politicians hostile to Social Security and the financial services industry, and misleading media coverage.
The danger here is that the current high level of worry over Social Security’s viability could become self-fulfilling if it erodes political support. That would be especially damaging for young people when they retire, argues Peter Arno, an economist at the University of Massachusetts-Amherst, and a scholar of both Social Security and health policy.
Arno points to four trends that suggest millennials will need to rely to a much greater extent on Social Security than current retirees and those approaching retirement now. Millennials will be far less likely to receive retirement income from defined benefit pensions, and they have lower rates of home ownership than earlier generations. And, wage stagnation and crippling levels of student debt make it impossible for many to save for retirement.
“If you add up all these factors, you have a constellation of things that will make it very difficult for young people down the road,” he said. “That’s why Social Security is crucially important for both this generation and younger people. Joining forces between older folks in the boomer generation and the millennial generation offers a tremendous strategic opportunity to bolster the long-term stability of Social Security.”
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