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How Social Security Benefits Will Inadvertently Be Affected by One Common Millennial Lifestyle Choice

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The U.S. birth rate has been dropping over the past several years — specifically among millennials — leaving many to wonder whether it will have broader implications for Social Security benefits.

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The estimated replacement fertility rate is 2.1 live births per woman; however, the birth rate fell to 1.64 in 2020, as previously reported by GOBankingRates, making it the lowest number of births since 1979. Analysts at the Brookings Institution predict the birth rate will remain below the replacement rate over the long term.

In addition to having fewer children, parents are having them later in life. The age of motherhood has been increasing in the U.S. and other nations over the past several decades. In the U.S., the average age for women is around 30 years old.

A study from the Pew Research Center found that a growing number of childless U.S. adults say they are unlikely to ever have children. Approximately 44% of non-parents ages 18 to 49 say it is not likely that they will have children, an increase from the 37% who said the same in a 2018 survey.

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Make Your Money Work

The Social Security Administration pays close attention to birth rates. The Social Security program is largely a pay-as-you-go system. Today’s workers are paying for the benefits of today’s retirees. A lower birth rate means fewer workers will be contributing to the program in future years.

“If there are fewer workers in the future, then that definitely could impact the amount of money going into the Social Security system, which would affect benefits too,” Anqi Chen, assistant director of savings research at the Center for Retirement Research, told CNBC.

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