According to a recent NerdWallet survey, nearly one-third of Americans rely on Social Security benefits to sustain them during retirement, even as the fund’s reserves dwindle and the threat of benefit cuts looms over the next decade.
The Harris Poll conducted the survey with 2,096 U.S. adults from July 11 to 15, revealing some concerning trends: 31% of respondents indicated that they do not have, nor plan to have, a retirement account available once they retire.
Interestingly, 30% believe that Social Security will provide adequate income for a comfortable retirement. This optimism is particularly high among younger generations, with 46% of Gen Z (ages 18-27) and 44% of millennials (ages 28-43) counting on Social Security despite having years before reaching retirement age.
The Social Security Administration (SSA) reports that the average monthly retirement benefit stands at $1,907, translating to an annual income of less than $23,000, serving around 67 million recipients—about one in five Americans.
However, there are warnings that if the Social Security trust fund runs dry, cuts to monthly benefits could occur. Experts predict this could happen within the next decade, following the latest Trustees report which states that the trust fund may be exhausted by 2035—just a year later than previous estimates.
If this occurs, beneficiaries could see a 17% reduction in benefits, a situation that could severely impact those who depend on Social Security for their daily needs and expenses.
Calls for reforming the Social Security program have grown, with many advocating for changes to ensure its financial viability and benefit levels. Nonetheless, such reforms are often politically sensitive, potentially involving tax hikes for citizens.
The findings from the NerdWallet poll are troubling for financial experts who emphasize the importance of diversifying retirement savings. “Relying solely on Social Security is risky since its long-term viability is uncertain,” warns NerdWallet. They recommend that individuals start saving for retirement regardless of age and prioritize financial stability by managing debts and establishing an emergency fund.