Just over 2 in 5 Americans under 60 believe Social Security is a Ponzi scheme, according to a new survey, while 7 in 10 don’t expect much — if any payout — from the entitlement program when they retire.
The results underscore the growing fear that Social Security will run into solvency issues, meaning older workers will reap the benefits, while younger ones continue to pay into a system, uncertain about the future of their benefits.
The survey from MedicareAdvantage.com, a seller of Medicare plan options, polled 1,054 adults in their 20s to 50s in November.
“I think it’s a fair fear because there are a lot of unknowns. The workforce is now shrinking and we’re becoming increasingly in a gig economy,” said Christian Worstell, a licensed insurance agent and author of the survey report. “Over the next five to 10 years, we will get strained since there won’t be enough of us in the workforce.”
The Social Security Board of Trustees estimated that the surplus in the fund that pays out Social Security will be depleted by 2035, meaning payroll taxes would only cover 75% to 80% of full benefits. It’s a problem President-elect Joe Biden likely will have to grapple with.
‘A larger misunderstanding of how Social Security works’
Those in their 50s were more likely to call Social Security a Ponzi scheme at 65%, compared with only 28% of those in their 20s holding the same sentiment.
“My gut feeling is that this stems from a larger misunderstanding of how Social Security works,” Worstell said, noting that 40% of adults under 60 in the study mistook the program as a personal retirement account they pay into to use when they retire.
“It’s based off of conspiracy theories,” he added.
That lack of confidence may be the reason why half of respondents said they would opt out of Social Security altogether if they could.
“I think there’s a broader overall sense that Congress has become out of touch with the average American,” Worstell said. “They don’t realize how important Social Security is.”
‘Younger people have less confidence’
President-Elect Joe Biden’s proposal to pass a new Social Security 6.2% tax on earnings above $400,000 to increase retirement security for millions comes when confidence in the system has dwindled across generations.
A fifth of respondents believe Social Security won’t exist by the time they retire, the survey found, while half believe benefits will be somewhat or greatly reduced.
“It makes sense that younger people have less confidence than older people about Social Security, since older people have lived long enough to see Congress save these programs a few times,” Worstell said. “A lot of younger people became fearful due to Trump’s actions.”
In August, the president issued an executive action allowing workers to defer their Social Security taxes temporarily until the end of the year to boost paychecks. The president had expressed interest in making the cut permanent if he won re-election, which would have meant the surplus in Social Security funds would have run out by 2023 instead of 2035.
Just 7% of respondents had the highest confidence that the government could fix Social Security, while 57% said they are only slightly confident or not confident at all. Still, nearly three-quarters believe the government should provide more financial support to retirees.
“American retirees deserve to live their retirement years with dignity,” said Brent Weiss, cofounder of Facet Wealth, “without worry of future healthcare costs, and without worry of being a financial burden on their children and communities.”