Why Millennials Have the Greatest Stake in Social Security Expansion
Discussions about Social Security in politics and the media often focus on its role as a retirement program that provides vital protections to seniors. But the fact is that Social Security provides vital retirement, disability, and survivors’ insurance for all generations of Americans. In addition to significantly reducing senior poverty, Social Security is the nation’s largest children’s program and lifted 6.9 million Americans under age 65 out of poverty in 2014. And no generation has a greater stake in the fight to protect and expand Social Security benefits than today’s young workers, the millennial generation.
After coming of age in the wake of the Great Recession, millennials have inherited decades of wage stagnation and growing inequality. While median annual wages have grown just $1,422 in real dollars from 1986 to 2013, the average cost of attending a four-year college has more than doubled. Unless these trends reverse, many millennials will have to defer saving for retirement in order to pay off their educational debts, leaving them with fewer resources in retirement beyond Social Security. Indeed, millennials have accumulated less wealth than their parents’ generation had at the same age 25 years ago. These factors, combined with the disappearance of employer-sponsored traditional pension plans, mean that 3 in 5 younger households are at risk of being unable to maintain their standard of living in retirement.
The problem is particularly acute among millennials of color. Black and Latino households typically have lower incomes and significantly fewer assets than white, non-Hispanic households. And although Social Security benefits replace a larger percentage of lower earners’ incomes, their benefits are still smaller than those received by higher earners—leaving households of color less able to contend with the high healthcare costs experienced by seniors and people with disabilities.
The program was created in response to economic circumstances similar to those that have shaped the formative years of today’s young workers.
Social Security is also critical to millennials during their working years. Before reaching their full retirement age, an estimated 1 in 4 of today’s 20-year-olds will become disabled, and 1 in 8 will die. Such events can be devastating at any age, but they are especially harmful to young workers and their families, who will have had fewer years to pay off educational debts and accumulate wealth. Many of these young workers and their families—especially those with low incomes—are also unlikely to be covered by private insurance, particularly in the case of disability.
Fortunately, virtually all working Americans are covered by Social Security’s disability and survivors’ protections, and can expect to receive benefits for themselves and their families. These benefits are significant—a 30-year-old worker who earns $30,000 a year with a spouse and two children has earned the equivalent of roughly $1.1 million in disability and life insurance protections through Social Security. Although no one anticipates dying young or experiencing a permanent disability, Social Security’s modest but vital benefits are often the only way families can continue to afford basic necessities and avoid falling into poverty.
But instead of increasing benefits, opponents of Social Security suggest that spending on the old is stealing from the young, and that the nation must choose between supporting one generation or the other. They call for “generational equity”—the idea that unless we cut benefits soon, we will run out of resources to protect younger workers in retirement. But this is false. Even after 2034, when the program’s shortfall is projected to occur, Social Security will still be able to pay around 75 percent of promised benefits. And it’s worth noting that the same individuals who call for changes to protect the young also promise to protect current beneficiaries by forcing benefit reductions entirely on new beneficiaries—that is, by cutting the benefits of the same younger generations they claim to be protecting. These are unnecessary choices that other nations aren’t making—countries that spend more on seniors also spend more on children.
Social Security should be expanded now; not just for today’s seniors, but for millennials as well. The program was created in response to economic circumstances similar to those that have shaped the formative years of today’s young workers: the Great Depression. Social Security was a cornerstone of the New Deal, a range of policies which created jobs, invested in national infrastructure, regulated big banks, and protected workers’ rights. Similarly, expanding Social Security should be a cornerstone of an agenda for young workers, accompanying policies such as raising the minimum wage, closing the gender pay gap, and adopting paid family leave. Not only would these policies improve the economic security of today’s young workers; many of them would help to improve Social Security’s long-range solvency as well.
Most importantly, millennials recognize that Social Security is a symbol of intergenerational solidarity, in which workers make contributions to fund current benefits while earning vital insurance protections for themselves and their families. Nearly 7 in 10 millennials agree that “we should consider increasing Social Security benefits.” It’s time for policymakers to listen to them, and expand Social Security for all generations of Americans.