Generation Without Social Security : Millennials Losing Hope

The problem with reforming Social Security (SS) is and always has been, the politics of progressive socialists that believe anything that changes the current formula would have catastrophic effects on  their voter bases that relies on to support their candidates, those that must have Social Security benefits to survive.

People in a survival mode fear change of any kind and therefore susceptible to any suggestion they might lose their benefits

It's called the 'Third Rail' of politics for good reason, this is where the power to win election, it's a group of individual that has no where to go, everything they do is tied to their SS check. So it's understandable to believe when SS people hear progressive democrats warning them if they vote for a Republican their SS benefits will be taken away, not changed to make the system sustainable, but taken away.

It's fear politics at it's worst but it's works every time it used. And when the system fails as it surely will, the progressive democrats will blame the Republicans for standing in the way of all the efforts of democrats to reform the system and millions will ready to believe it.

So it's easy to see why the next generation headed for SS believes they will find a whole new system or no system at all.

Millennials Not Expecting Social Security Benefits
Source: Matthew La Corte, "Sorry, College Grads, You'll Probably Never Get Your Social Security Money," Daily Caller, June 3, 2014.

June 9, 2014

Only eight percent of millennials expect to receive full Social Security benefits, and more than half (51 percent) believe that they will see zero Social Security money by the time they reach retirement, the Daily Caller reports.

A recent Pew poll highlighted millennials' lack of faith in the government retirement program. Such skepticism is entirely warranted, as the Social Security program needs a massive structural overhaul if officials expect the program to continue providing retirement benefits.

The largest federal program in operation, Social Security represents a staggering 23 percent of the federal budget. In 1940, just 55 percent of workers were covered by the program. Today, that number is 95 percent. Why the spike? Improved life expectancy and medical improvements are a major factor. While life expectancy after the age of 65 was just 12 years in 1940, it is 19 years today. Yet despite that seven year increase, the eligibility age has changed by only two years.

As baby boomers transition into retirement, the system will see serious strains. Within 15 years, the number of Americans reaching retirement age will increase by a staggering 70 percent, while the number of Americans of working age will increase by just 6 percent.

• In 1935, when the program started, 17 workers paid for the benefits of one retiree. By 2035, estimates indicate that just two workers will be paying for the benefits of a single retiree.
• The program is expected to run out of funds by 2038.

How to reform the program? Raise taxes, cut benefits or create private investment accounts. According to economists, the U.S. would have to raise payroll taxes by 30 percent to cover the shortfalls. Instead, the U.S. should introduce private accounts:

• Private accounts would bring a higher rate of return. While medium-income workers born in the 1960s can expect a 1.9 percent to 2.7 percent rate of return on their social security dollars, average returns on the S&P were 6 percent to 9 percent from 1926 to 2002.
• Without changing worker benefits, the Cato Institute has designed a plan that would give workers under 50 the option to use a private, personal account instead of the current system. The accounts would use diversified, balanced portfolios.

Today's graduates are already struggling in a weak economy, and they cannot expect to see any retirement savings unless the Social Security program is reformed.