More Than 60% Wouldn’t ‘Survive Financially’ If Social Security Benefits Are Cut

More than half of Social Security recipients said their current benefits don’t cover their basic needs. So any reduction in those benefits would be a serious setback.

The future of Social Security is on shaky ground. If Congress fails to reform the program, the funds that pay out benefits to millions of recipients will be depleted by 2034. 

A Small Hiccup Could Pose Big Problems

To illustrate just how challenging things are for retirees, Nationwide asked U.S. adults who currently receive or expect to receive Social Security what would happen if they missed half of a monthly payment. More than 60% said they could not survive financially. 

Roughly 74 million people received Social Security benefits in July. It’s estimated that nearly 22 million U.S. retirees rely on the program’s benefits as their only source of income.

Budgeting For The Unknown

More than 80% of Americans are concerned about Social Security’s long-term outlook, Nationwide found. Planning for the future is difficult when you’re not sure what benefits, if any, will be available to you, said Shannon Benton, the executive director of The Senior Citizens League.

“There is definitely financial uncertainty across generations when it comes to Social Security,” Benton said.

Younger generations are particularly skeptical regarding the future of the program: 38% of Gen Z and 34% of millennials said they don’t expect to receive a dime of the Social Security benefits they have earned, according to Nationwide. 

Less Certainty Requires More Savings

They’re right to be concerned; certified financial planner Jason Fannon said he is telling younger generations to plan for their retirements as if Social Security won’t be a reliable option.

“If I were a younger person, I would approach retirement as if it wasn’t going to be available to me,” Fannon said. “I don’t think that’ll be the case, I think we’ll have Social Security, but it might look a little different. I would suggest not relying on it being there [for planning purposes].”

Fannon said he is telling his clients in their 40s and 50s to beef up their savings in case benefits are cut. This includes maxing out their 401(k)s and IRAs if possible. This is the age range he suspects will be hit the hardest by reduced benefits, since the projected depletion date falls when many are close to receiving their benefits 

“People who are in their 50s can’t look at the Social Security calculator and say, ‘This is what I’m going to have for retirement, because they don’t know,” Benton said. “It could very well be cut quite a bit even by the time they retire.”