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As Social Security turns 90, a new survey shows that 65% of retirees rely on it
74 million Americans receive the benefits, and 96% of Americans approve of the program.
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Listen to Marketplace each weekday at 3:30 p.m. and 6 p.m. on 89.3 FM. This story originally aired on “Marketplace” on Aug. 13.
Aug. 14 is the 90th anniversary of the Social Security Act, which ushered in an era of retirement security for older Americans. The program is facing a fiscal cliff, however, in a few years, it will no longer be able to pay full benefits unless policymakers make changes. The looming shortfall comes amid signs that more older people are relying on Social Security to make ends meet.
Before Social Security, America had literal poorhouses — places where people who could no longer work could find shelter and food.
Then, at the height of the Great Depression, President Franklin D. Roosevelt signed the Social Security Act into law.
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“We can never insure 100% of the population against 100% of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection,” Roosevelt said.
Today, 74 million Americans receive the benefits.
“Social Security is incredibly popular,” said Bill Sweeney, senior vice president of government affairs at AARP.
He said 96% of Americans approve of the program. In a new survey, AARP found that the number of people who said they significantly rely on Social Security payments went up to 65%, compared to 58% a decade ago.
“We have a crisis around saving for retirement,” Sweeney said. “Many people get to retirement age, they just don't have enough money saved, they don’t have — a lot of people don’t have any money saved.”
In fact, about 40% of Americans have no retirement savings at all, according to a recent Gallup poll.
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The problem — for them and everyone else — is that Social Security is facing the real threat of having to cut benefits.
“Right now, the system is taking in less money in tax revenue each year than it needs to pay full benefits,” said Andrew Eschtruth, director of the Center for Retirement Research at Boston College.
To pay out more than it takes in, Social Security has been dipping into its savings, known as the trust fund.
“That trust fund reserve is expected to be depleted for the retirement part of Social Security in 2033,” said Eschtruth. When that happens, retirees could see their benefits cut by about 20%.
This problem has come up before. In the early 1980s, Social Security was just months away from having to cut benefits when President Ronald Reagan signed into law a bunch of reforms.
“We're entering an age when average Americans will live longer and live more productive lives, and these amendments adjust to that progress,” said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities. “It's not something where you can't imagine a fix.”
“It's just something where people are going to have to do something that maybe they wouldn't prefer to do. So contribute more to the system through their payroll tax contributions or get a benefit cut,” she added.
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Romig said polling consistently shows that people would rather pay more than take cuts.
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