Confidence in future of Social Security is at 15-year low among younger adults

NINA MOINI: Confidence in the future of Social Security among younger adults is at a 15-year low. That's according to a new survey from AARP, the interest group focused on issues affecting Americans over 50 years old.

AARP has been tracking public attitudes and opinions about Social Security for decades. So, here to share more about this study's findings is Kathy McCleer, the Director of AARP Minnesota. Thanks for being here, Kathy.

KATHY MCCLEER: Thanks for having me.

NINA MOINI: We're also thrilled to have Doug Craig on the line. He's a retiree from White Bear Lake and volunteers with AARP Minnesota. Thanks for joining us as well, Doug.

DOUG CRAIG: You bet. Thank you.

NINA MOINI: Kathy, for starters, let's just talk about the basics for folks who need a refresher just about how Social Security works. Would you fill us in?

KATHY MCCLEER: Absolutely. So Social Security really is a bedrock of retirement in America. And for one in five Minnesotans who receive Social Security payments, it is truly a lifeline. It's a promise that was made to Americans who work hard and pay in, and we all have to make sure that Social Security will be there when we all need it in our retirement.

NINA MOINI: Yeah. And, you know, Kathy, I don't know if I'm considered a younger person anymore, but you're saying that the confidence is particularly low among younger people who may be thinking, will I ever even be able to retire. What do you think's contributing to that lack of confidence in Social Security?

KATHY MCCLEER: Well, some of it certainly stems from the Medicare and Social Security trustees report that came out about a month ago, that shows that the Social Security trust fund will be depleted by 2034. So what our survey found is that 36 of respondents, including 42% of those-- 36% of respondents, 42% of those 18 to 49, falsely believe that when that happens, that Social Security will be unable to make any sort of payments.

But that's really just not true. Social Security is not going broke. Social Security is funded by payroll taxes that we all pay in with every paycheck we get. It's paid both by the worker and the employer. So as long as there are workers paying into Social Security, it will continue to make payments, but at a reduced rate.

So if nothing is done, if Congress doesn't step in and make some changes, anyone who currently receives Social Security benefits, or those in 2034 who start receiving, would get, on average, $4,000 a year less. And I don't know about you, but I wouldn't want a $4,000 a year pay cut.

NINA MOINI: Absolutely. Doug, to Kathy's point, thank you so much for your perspective today. Do you want to tell us a little bit just about how Social Security impacts your life since you've been retired?

DOUG CRAIG: So, sure. I started receiving Social Security a little over a year ago. I'm the financial planner for our family, so I have this really cute spreadsheet that tells us a lot of things about how the future will look for us, all the way out to our end days.

What I can tell you, just mathematically, is that Social Security comprises over 50% of our income at this point, supplemented, then, by savings, like many people. But if I took a 50% or better pay cut-- now that assumes obviously all of it goes away-- that would be staggering.

But even the 20% that Kathy's referring to in the trust funds is quite a game changer, really. You work hard. You sacrifice when you're younger to save for your later years. And you get there and find now, oh, 20%.

Well, the many dreams we had that we worked hard for over 40 years all of a sudden changed to can we provide shelter, clothing, health care, and so on? Will we be able to do that till our end days, which is really the key?

NINA MOINI: Yeah. And I've never heard a spreadsheet described as "cute," but I love that. I love that for you. Doug, do you talk to your friends about this? What are people around your age who may be retired saying?

DOUG CRAIG: Well, pretty much most of the people I run into mimic a lot of what I say. We live in a community that's largely based on our peers and so forth, and they have the same feelings about their dreams being eroded or demolished by a significant cut in Social Security, even 20%.

But I can share this also. I have an uncle who lives up on the Iron Range. He's a gentleman that's obviously older than myself. He, to this day, still works a part-time job up there simply to have enough. Social Security is there for him. But if you took that away, with a little bit he has in his pocket, he would definitely fall below the poverty line in a heartbeat.

NINA MOINI: Kathy, do you see a lot of older folks who want to be retired having to go back to work. Are you seeing more of that?

KATHY MCCLEER: Yes, certainly. I mean, people--

DOUG CRAIG: Oh, yeah-- Sorry.

NINA MOINI: Oh. You can answer first, Kathy, but you could answer, too, Doug. But let's do Kathy first.

KATHY MCCLEER: Yeah. I mean, as we're living longer, people are working longer, often because they choose to and they just want to stay engaged in the community.

NINA MOINI: Sure.

KATHY MCCLEER: But many-- but many do work longer and take those part-time jobs simply because they have to. And if I could, I just want to demonstrate how important Social Security is to those Minnesotans.

Again, we have 1.1 million Minnesotans who receive those monthly payments. The average monthly payment for retired workers is just over $2,000. And as Doug said, he's one of the 43% who receive that monthly check and rely on it for half of their income.

We have about 19% of Minnesotans who receive Social Security who rely on that income for 90%, if not all, of their income. And so when you start talking about that $2,000 a month or less, in many cases, if you're a woman, if you're a woman of color, a person of color, that $2,000 may actually be less. And so when that's making up 90% of your income, you can see just how important that resource is.

NINA MOINI: Doug, what do you think?

DOUG CRAIG: No, I would absolutely echo what Kathy says. In my case, I just happen to have a relative that I can cite as a specific example up on the Iron Range. It is critical. And there's even other people that I who, frankly, earned a pretty reasonable living, but now in their retirement are working part time. I have another friend who works in a local hardware store up North and it is because he needs to supplement his income.

NINA MOINI: Kathy, what conversations are you having at AARP about what can be done to make sure that Social Security will be there, like you said, but that it's in a good place, and it's able to give folks what they need as we all age?

KATHY MCCLEER: Certainly. We're calling on Congress to really step up and make some of those necessary changes. There's a whole menu of potential options for shoring up that shortfall. But the reality is we've earned this benefit.

We've earned the Social Security with every paycheck we've earned through our lifetime. And it's really important to make sure that the people who have worked hard and paid into Social Security their entire lives, that Congress is working to protect and strengthen Social Security, not just for those who are currently receiving those benefits, but for future generations to come.

NINA MOINI: Yeah. And Doug, like I mentioned, for a lot of people, retirement can seem so far down the road. Do you have any advice that you would want to share with younger people to help them financially really prepare for that retirement? Things that maybe you would have done differently, or just any words you want to share?

DOUG CRAIG: Sure. Certainly one thing, because it's shown so clearly in my cute spreadsheet, is save early and save often. I mean, the key, really, at the end of the day, you heart financial planners talk about this, but they use the expression "pay yourself."

And part of what they mean by that is put money aside first and try to work your standard of living so that you can enjoy yourself today, but you've clearly set aside some money that you don't touch for that future. It's absolutely amazing, the power of compounded interest.

And the only thing I'll say there is simply that for many people, even if they don't start saving to-- let's say they're closer to 40. The amount of money they'll have in their account by the time they get to retirement will more than double because of the interest alone. It's almost like having a job, that all you have to do is be able to save, and you're earning on it, right?

NINA MOINI: Yeah. Kathy, would you have anything to add? I mean, should people seek outside help, like a financial planner? What do you recommend?

KATHY MCCLEER: Yeah, that's certainly helpful. And as Doug said, the earlier you start, the better. And I think it's also important to note that Social Security was never meant to be a full replacement of our working wages in retirement. It was meant to lift people out of poverty and be part of that, as we call it, the three legged stool.

So you have Social Security, you have your personal savings, and then you might have an employer-sponsored retirement plan. That pensions are kind of a thing of the past. And since those are going away, it's becoming even more incumbent upon workers to make sure that employers are offering those opportunities to save through the workplace, because people are 20 times more likely to save for retirement if they have an opportunity to do so through the workplace.

So as we're embarking on a Social Security's 90th anniversary that's coming up on August 14, Social Security has never missed a payment. It's a promise that was made to Americans, if they work hard, that it'll be there when they need it. And so I would encourage people to educate themselves.

You can go to ssa.gov. You can create an account. Even young people in their teens or 20s, if you have that first job, and you can create an account for yourself and see what that benefit will be when you retire. And so the earlier you start planning, the better.

NINA MOINI: Earlier the better. Kathy and Doug, thank you both so much.

KATHY MCCLEER: Thanks for having us.

DOUG CRAIG: Thank you.

NINA MOINI: Thank you. That was Kathy McCleer, the Executive Director for AARP Minnesota, and Doug Craig, a retiree from White Bear Lake, and a volunteer with AARP.