In an alarming glimpse into Americans' views on retirement, a new survey from Allianz Life reveals that a staggering 74% of participants do not believe they can rely on Social Security as a stable source of retirement income.
Adding to the concerns expressed by survey participants, 88% acknowledged the need to develop a secondary source of income over and above Social Security to ensure sufficient resources to see them through their golden years.
Americans' expectations when it comes to Social Security were measured in the 2023 1Q Quarterly Market Perceptions Study from the Allianz Life Insurance Company of North America, and the results suggest that the faith of many in the system is in the midst of a downturn.
The skepticism evinced by a large proportion of respondents was validated by Kelly LaVigne, Allianz Life's vice president of consumer insights.
“Social Security benefits are often the backbone of a retirement strategy, but it cannot be your entire strategy,” LaVigne began.
The company executive added, “A strong retirement strategy will ensure you have enough guaranteed income to cover your essential expenses. That guaranteed income can come from Social Security benefits along with other investments and protection products such as annuities.”
The Allianz survey also found that a substantial number of Americans are in the grips of doubt about their financial health over the long term.
Underscoring that point is the fact that 78% of survey participants expressed concerns that they will be unable to afford their preferred lifestyle once they retire.
That outcome represented a 5-point increase from the previous quarter and a 10-point year-over-year rise.
Inflation and rising costs of living were blamed for the growing sense of unease among Americans contemplating the feasibility of retirement.
The concerns cited by survey participants are not terribly surprising – or unfounded – given recent reporting from the Treasury Department suggesting that Social Security benefits are in danger of being cut by upwards of 20% as soon as 2034.
That projection comes in at a full year earlier than prior reports suggested that a cut in benefits would potentially be required.
Slowing near-term economic growth has been blamed for the downward revision, and the Treasury Department also showed Social Security trust fund amounts dropping by $22 billion in 2022 alone.
All of these factors and warning signs have caused red flags to be raised by many in Washington, D.C., but whether any agreement on solutions can be achieved is another question entirely, as recent negotiations on the looming crisis have highlighted.
As The Hill reported earlier this year, a bipartisan group of U.S. senators has been collaborating on potential adjustments to the Social Security program meant to extend its solvency, but those involved have made no secret of the political obstacles to achieving compromise that continue to exist.
While not many details have emerged from the talks that are said to include prominent lawmakers from both sides of the aisle, a change to the retirement age is reportedly among the proposals currently on the table.
Other rumored potential changes include an adjustment to the benefits calculation formula away from a system that determines payments based on average earnings and toward one in which disbursements are based on the years a retiree made payments into the system. Increases to the payroll tax rate and taxable wage cap are also said to be under consideration, according to The Hill.
Despite the growing sense – among legislators and everyday Americans alike – that the Social Security system is a veritable ticking time bomb, the issue has, in the words of negotiation group member Sen. Mike Rounds (R-SD), always been “a really easy third rail to use on both sides of the aisle if you want to go after an opponent,” so whether common ground can actually be reached any time soon is something that remains to be seen.