Half of millennials do not believe Social Security will still exist when they are ready to retire, a survey released Wednesday by the iOMe Challenge and conducted by the St. Norbert College Strategic Research Institute found. Over one-quarter of millennials believe Social Security will still exist, but they will receive smaller benefits.
The report found that the traditional three-legged stool so many of today’s retirees depended on would be reduced to one primary leg, that of personal savings and investments.
“When the views of Millennials on the future of Social Security are juxtaposed with employers’ shift from a defined-benefit retirement to a defined-contribution model, it is clear that for Millennials, financing their retirement is going to rest far more on their individual shoulders,” David Wegge, chair of the iOMe Challenge and executive director of the St. Norbert College Strategic Research Institute, said in a statement.
Despite this outlook, those who do not think they will be able to rely on Social Security are the least likely to save. Just 40% of those who said they don’t think Social Security will last until they retire are saving for their retirement, while 48% of their slightly more optimistic counterparts are saving. Of the 5% of millennials who say Social Security will still be around and paying out benefits at the same level, 55% are setting some money aside for their retirement.
“It may be that these individuals are simply more optimistic and also more concerned about their personal future, so they are simply going to do everything they can to be assured of reasonable financial security in retirement,” Wegge told AdvisorOne.
Unfortunately, millennials find it challenging to save overall, the survey found. Less than half are setting money aside each month and the median amount saved is just $75. Most millennials are only saving between $25 and $50. Fifty-two percent of millennials say they haven’t given any thought to how they will finance their retirement because they are focused on meeting current financial obligations.
Women and Republicans are more pessimistic than men and Democrats about the availability of Social Security at retirement. Fifty-five percent of women say they’ll retire without any help from Social Security compared with 44% of men. Sixty percent of Republicans agreed that Social Security will disappear compared with 45% of Democrats.
At work, millennials are still pessimistic. Over half of millennials working full-time say Social Security will run out by the time they need it; 47% of part-time workers and 48% of unemployed millennials agreed. While 53% of millennials who work full-time say Social Security will not exist, 57% say that their employer provides some retirement benefits. Forty-four percent of those employed full-time say they are investing and saving in addition to their employer’s assistance.
The survey was conducted online in August 2011 among 642 18-29-year-olds. The iOMe Challenge organization was formed by a group of concerned citizens, business leaders and academicians to engage and challenge young people to begin thinking about their financial future. It is sponsored by Ally, PAi, Sage, American Society of Pension Professionals & Actuaries, the National Association of Government Defined Administrators and St. Norbert College.