A new research report from the Cato Institute finds that 62% of Americans believe that Congress has broken its promises in managing Social Security. In addition, 54% believe that benefit amounts are too low, while 58% think that Social Security offers a “worse deal” to younger workers compared to current retirees.
Even as current and future beneficiaries’ views of the insurance program are already bleak, the survey suggests that Americans actually underestimate the severity of Social Security’s financial problems. That is, some 76% of Americans are unaware that the underfunded program appears headed toward insolvency within a decade.
Likewise, when survey respondents were informed that benefits would need to be cut by about a quarter if Congress does nothing starting in 2033, 44% conceded that the situation was “more serious” than they thought. Only 5% said the Social Security situation was less serious than they expected.
While the program continues to enjoy significant public support, the authors note, with 83% of respondents viewing it favorably, policy suggestions differ meaningfully across population groups. This particularly applies to younger and older taxpayers.
As the report details, 53% of Americans younger than 30 say that younger workers should be protected from higher taxes even if doing so requires reducing benefits for current retirees. In sharp contrast, 89% of respondents age 65 and older believe that current retirees’ benefits should be protected even if that means higher taxes on younger workers.
On the policy side, the majority of Americans favors small, targeted reforms, such as freezing benefits for one year (57%) or slowing cost-of-living adjustments (58%). These fit with the more common belief that Social Security is “essentially a retirement savings plan” they paid for (a view cited by 60% of respondents) rather than a welfare program (24%) they are entitled to.
The public opposes most major structural reforms required to address the long-term financing shortfall, the report warns, including cutting benefits for current and future retirees (77% in opposition), cutting benefits just for future retirees (67% oppose), paying benefits only to seniors in financial need (67% oppose), or raising the retirement age to 70 (65% oppose).
Americans initially appear open to tax increases, according to the report, with 55% saying they would support raising the payroll tax from 12.4% to 16.05%. But support collapses when framed in dollar terms, the authors find. Specifically, 77% oppose even a $1,300 annual tax increase — less than what would be necessary to maintain current benefit levels. Moreover, the report finds, 61% oppose tax hikes if current workers weren’t guaranteed to get back what they contributed.
These views, the authors speculate, seem to be influenced by 49% of Americans not realizing that Social Security is a pay-as-you-go system in which current workers’ payroll taxes fund current retirees’ benefits — not the workers’ own future retirement.
“This misunderstanding reinforces the mistaken belief that Social Security functions similar to a personal retirement account,” the authors suggest. “[Additionally], few understand how the program’s demographic foundations have shifted.”
In 1950, the authors recount, about 16 workers supported each retiree. Today, only 2.7 workers do so. Despite this, the survey shows, Americans are as likely to believe that the number of workers per retiree has increased greatly (27%) as to say the number has decreased substantially (27%).
“In short, most do not know that the ratio of workers to retirees has collapsed, sharply reducing the pool of contributors available to fund benefits,” the report warns. “Americans need a clearer understanding of these dynamics: the small contributions of early beneficiaries, the pay-as-you-go design, and the dramatic shrinking of the worker base. Without grasping these facts, the public cannot understand why Social Security is not a retirement savings program and why the system has such a significant shortfall.”
This makes it more difficult for policymakers and advocates to build public support for necessary changes. Unless Americans accept significant adjustments to either their taxes or their benefits, the authors warn, Congress could accrue more debt to paper over any significant reforms.
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