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How Will Social Security’s Future Affect the Economy?

 Change is coming for this program, whether we’re prepared or not. How will America’s pocketbooks and savings habits adjust? 

Quick takeaways

•  The future underfunding of Social Security isn’t a new problem. Seven years ago,a Congressional commission identified issues and possible solutions. But collaborative planning remains elusive.
• • The economic impact of changes to Social Security isn’t just about reduced benefits. Will those who can work continue to do so for longer? Will those who can’t work longer face extreme financial need? The impact has real consequences for current and future retirees.

 Sometimes legislation gets debated and passed (or not) with little fanfare. Take the estate tax: Reform enacted in 2017 impacted just 1,900 taxable returns, or less than 0.1% of the estates of people who die each year. A proposed 2023 capital gains tax bill would have consequences for those who make more than $3.8 million—a whopping 1% of Americans. But the endless, unresolved debates about the future of Social Security matter quite a lot to you, your loved ones, and the well-being of the nation. Currently, 70 million Americans receive benefits each year from the nearly century-old program. The time to fix what ails it gets more urgent every day. Whatever legislators do—or don’t do—may shift how you save for and experience retirement, and potentially the overall health of the economy, too.

The evolution of support for people in old age

The idea of providing some sort of income in old age or due to challenging circumstances didn’t originate with Social Security. Elderly members of fraternal organizations and Civil War veterans and widows are two examples of groups who received financial support in the 1800s and early 1900s. In fact, in 1935, the year Social Security was enacted, 30 states already had some form of an old-age pension, albeit programs that were mostly exclusionary and less than adequate: Only about 3% of seniors received a benefit, averaging about 65 cents a day. 

At its inception in the depths of the Great Depression, Social Security was no different: It’s always been defined by who gets it (and who does not) and how much they get. In 1935, the have nots included farm and domestic workers; self-employed doctors, lawyers, and ministers; and employees of federal, state, and local governments and non-profits. Today, Social Security is much more inclusive than it is exclusive: 97% of older adults have or will receive benefits.

Possibly less Social Security and a longer retirement 

Which brings us to 2023 and who wants to or needs to receive Social Security. A significant portion of the population hasn’t been able to supplement expected Social Security benefits with retirement savings. About 27% of people age 59 and older haven’t saved anything for retirement. Crucially, for 4 in 10 adults age 65 and older, Social Security keeps them above the poverty line. As life expectancy increases, so do retirement lengths—so more people are going to need more money for a longer time. While simply working until later in the life is one solution, the ability to do that in large part depends on your employment status and health in your 50s: About 35% of people are not regularly employed by that age and of those, 60% will never find another job.

Finally—this is important—the number of people nearing or already claiming Social Security is at a historic level. In 2024, more Americans will turn age 65 than at any other point in history, an inflection some researchers refer to as Peak 65.

The United States, of course, isn’t alone in the conundrums of an increasing population of older people. France, for one, has been roiled by protests simply because the government wants to increase the retirement age from 62 to 64. Cultural norms, such as multiple-generation households, have helped other countries manage the care needed by society’s oldest members.

 www.principal.com

Sometimes legislation gets debated and passed (or not) with little fanfare. Take the estate tax: Reform enacted in 2017 impacted just 1,900 taxable returns, or less than 0.1% of the estates of people who die each year. A proposed 2023 capital gains tax bill would have consequences for those who make more than $3.8 million—a whopping 1% of Americans. But the endless, unresolved debates about the future of Social Security matter quite a lot to you, your loved ones, and the well-being of the nation. Currently, 70 million Americans receive benefits each year from the nearly century-old program. The time to fix what ails it gets more urgent every day. Whatever legislators do—or don’t do—may shift how you save for and experience retirement, and potentially the overall health of the economy, too.

The evolution of support for people in old age

The idea of providing some sort of income in old age or due to challenging circumstances didn’t originate with Social Security. Elderly members of fraternal organizations and Civil War veterans and widows are two examples of groups who received financial support in the 1800s and early 1900s. In fact, in 1935, the year Social Security was enacted, 30 states already had some form of an old-age pension, albeit programs that were mostly exclusionary and less than adequate: Only about 3% of seniors received a benefit, averaging about 65 cents a day. 

At its inception in the depths of the Great Depression, Social Security was no different: It’s always been defined by who gets it (and who does not) and how much they get. In 1935, the have nots included farm and domestic workers; self-employed doctors, lawyers, and ministers; and employees of federal, state, and local governments and non-profits. Today, Social Security is much more inclusive than it is exclusive: 97% of older adults have or will receive benefits.

Possibly less Social Security and a longer retirement 

Which brings us to 2023 and who wants to or needs to receive Social Security. A significant portion of the population hasn’t been able to supplement expected Social Security benefits with retirement savings. About 27% of people age 59 and older haven’t saved anything for retirement. Crucially, for 4 in 10 adults age 65 and older, Social Security keeps them above the poverty line. As life expectancy increases, so do retirement lengths—so more people are going to need more money for a longer time. While simply working until later in the life is one solution, the ability to do that in large part depends on your employment status and health in your 50s: About 35% of people are not regularly employed by that age and of those, 60% will never find another job.

Finally—this is important—the number of people nearing or already claiming Social Security is at a historic level. In 2024, more Americans will turn age 65 than at any other point in history, an inflection some researchers refer to as Peak 65.

The United States, of course, isn’t alone in the conundrums of an increasing population of older people. France, for one, has been roiled by protests simply because the government wants to increase the retirement age from 62 to 64. Cultural norms, such as multiple-generation households, have helped other countries manage the care needed by society’s oldest members.

www.shrm.org

Feeling physically safe at work is a luxury that many 9-to-5 employees often take for granted, but it’s one that doesn’t necessarily extend to workers in other industries.

More than half of frontline workers feel that the threat of physical harm is on the rise, and 40% claim they are more concerned about personal safety at work than they were a year ago, according to the 2023 Workplace Safety survey from security company Verkada. Nearly half of those frontline workers would quit their jobs if they could afford to, citing threats to their personal safety at work as the reason why. 

“Threats to safety are not just a hypothetical situation,” says Jake Stauch, director of product for Verkada. “This is the daily reality for the majority of frontline workers. Employees have faced many situations that they have felt unprepared for, and are calling to employers to address these matters.” 

Approximately 70% of the U.S. workforce is concentrated in frontline jobs, which includes positions in healthcare, retail and customer service. Within these groups, 59% percent of healthcare workers regularly worry about being assaulted at work, while 58% of retail workers are concerned about aggressive behavior from customers and 49% say theft and vandalism are on the rise.

“Frontline workers are regularly in contact with patients, customers and guests,” Stauch says. “We hear about them being accosted by irate fast-food customers, aggressive airline passengers and violent hospital patients. It’s the main cause of distress.” 

While 76% of employers tasked with 

overseeing these employees have admitted to having to deal with at least one security incident this year, the survey found that 69% of managers still report feeling very safe at work compared to just 37% of employees.

“This mismatch is a wake up call for employers,” Stauch says, noting that one in four individuals admit to turning down a job opportunity due to safety concerns. “Labor shortages have been mounting for frontline jobs, and employers can’t afford any preventable attrition.” 

A first step for employers is listening to better understand concerns and what solutions might help their people feel safer, Stauch says. Two in three workers want to see increased security measures and strategies put into practice at work, which is possible with existing tools and resources that are available to employers. An example would be adding panic buttons to areas where employees may find themselves alone with customers, and programming those panic buttons to take certain action, whether it’s sharing a live video feed with internal security teams, setting off an alarm or immediately alerting law enforcement. 

“Beyond the tools and solutions, employers need to take the time to educate their teams on what steps they are taking to ensure their safety,” Stauch says. “Safety shouldn’t be a privilege reserved for someone working behind a computer screen.”

benefitnews.com