Economist Alicia Munnell: 5 Biggest Worries Retirees Should Have About Social Security
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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Social Security is a key piece of many people’s retirement plans, designed as it was to make sure that no senior has to worry about being able to afford their basic needs after their working days are over.
Nonetheless, concerns abound, from experts predicting the Social Security Trust will run out of funds in the next decade to threats that President Donald Trump’s new administration will somehow gut the program with the assistance of Elon Musk’s Department of Government Efficiency — should it be put into action.
According to an interview with economist Alicia Munnell in The New York Times, these are the actual biggest worries retirees should have about Social Security.
Benefit Reductions
Munnell is not concerned that Social Security will run out altogether, but there is a very realistic possibility that younger people now may end up receiving less Social Security than their elders did. She suggested that if no congressional reforms take place to solve the shortfall, these benefit reductions could be as much as 21% after 2033. That means anyone who is expecting 100% of their benefits will want to have a back-up plan.
Dependence on Social SecurityÂ
If retirees are depending only on Social Security income, they might be in for a rude awakening when it’s time to collect. Munnell urged people who have access to retirement accounts like 401(k) and IRA plans, to take advantage of them, stating that while as many as two-thirds of U.S. workers have access to these plans, only about 45% of them utilize them. Those with time ahead of them to retire should make sure they’re investing in such plans, especially where an employer match is given.
Delayed Retirement AgeÂ
One solution to keeping Social Security more solvent has been to raise the retirement age so that it takes longer for people to tap these funds. This would, however, have a negative impact on lower-income people, those with physically taxing jobs or couples in which an older spouse has already retired and is waiting for a younger spouse to do so.Â
Longer Working Years
All of these challenges could make it necessary for people to work longer than they want to, and that could also pose challenges to the workforce itself, especially in jobs where younger people tend to be hired more frequently.
Overall Retirement Planning
What all the concerns about Social Security point to is having other forms of retirement income, be that through retirement accounts, CDs or any other kind of investment or plan.
And while the program may change in some capacity, Munnell thinks that Social Security is such a popular program across the political aisle that there will be sufficient motivation to do what’s necessary to save the program in some form or another.
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