One look at the United States debt clock is enough to send anyone into a panic about our country’s financial future. Our $21 trillion debt grows larger with every passing second, with no slowdown in sight.
Politicians in Congress share much of the blame for this. Every year they continue to pass budgets filled with reckless government spending, like doling out $3.5 million dollars to the NIH for a study on why lesbians are more obese than gay men.
While these nonsensical wastes of money contribute to the national debt, a larger part of our debt comes from entitlement programs like Medicaid, Medicare, Social Security, Unemployment and Welfare Programs.
Given the mismanagement of our country’s finances, it’s no wonder that 80% of millennial workers don’t believe that they’ll ever see a dime of the money they put into Social Security. Many believe that money has already been spent by the government in some way.
But new reports show that this pessimism may be unwarranted.
There is “zero doubt that Social Security will be there for millennials,” says Dean Baker, a senior economist at the Center for Economic and Policy Research.
Even if nothing is done to shore up the system, Baker says people retiring in 30 to 40 years can count on about 10% more money, in inflation-adjusted dollars, from Social Security than what today’s beneficiaries get.
That’s even though the system is projected to be able to pay only 75% of benefits starting in 2035 when the Social Security trust fund will deplete its reserves, according to estimates by the Social Security Administration.
If you’re still skeptical, you aren’t alone. After all, if the trust fund is set to be depleted by 2035, where is the money for social security supposed to come from?
Alicia Munnell, director of Boston College’s Center for Retirement Research explains. “People confuse the exhaustion of the trust fund with the end of the program. Even once the trust fund is gone, payroll taxes themselves, already in place, can pay 75% of benefits.”
It should also be noted that inflation isn’t going to have an impact on future benefits because they are increasing at a rate that outpaces inflation.
“Even if benefits are not paid in full, the average retiree in 30 years will be able to buy about 10% more with their Social Security check than a retiree today,” Baker says.
So rest easy millennials. Your benefits will be there for you to purchase avocado toast for decades to come.