A new survey shows just how much retirement money we’re missing out on. Happy Monday.
If you completely ignore reality and the dire state of our Social Security system, the average millennial couple could technically receive nearly double the Social Security benefits that current retirees collect. The purpose of the analysis, conducted by the Urban Institute, was to get Gen Y’s hopes up and then promptly rip their retirement dreams to shreds mere minutes later.
Why are your visions of piña coladas on the beach a pipe dream? Because the chances of us ever seeing that money are slim to none.
The $2 Million We’ll Never See
In what world could millennial couples possibly collect nearly $2 million in Social Security benefits? One where our Social Security system isn’t bankrupt and American workers will actually see a dime of the money they’re forced to put in.
Here’s the logic behind this: In 1960, a married couple with each partner earning average wages in a career beginning at age 22 and ending in retirement at 65 would receive approximately $300,000 in health and retirement benefits.
If benefits increase as promised, a modern day couple in which both partners are 30 years old, earn an average of $49,000 per year and plan to retire at age 65 (year 2050) would collect nearly $2 million in health and retirement benefits from Social Security and Medicare.
According to C. Eugene Steuerle, an economist with the Urban Institute who co-authored the analysis, increased benefits for millennials are mainly due to “cost of living increases, more years of benefits due to longer lifespans and better and more expensive healthcare.”
And Then Reality Sets In…
This rosy prediction of course ignores the financial status of our Social Security and Medicare trust funds, both of which will be depleted by 2034 and 2030 respectively if Congress doesn’t act.
Then, the Social Security Administration would only be able to pay 75 percent of promised benefits, with Medicare faring slightly better at 86 percent.
Considering that keeping benefits at current levels would mean spending less on important programs like education, infrastructure, and defense, these eventual cuts are a likely reality. And the Urban Institute’s analysis merely a reinforcement of how well and truly fucked we are.
Basically, if everything didn’t suck, we would be balling out come age 65. Thanks for the reminder.
Aside from giving you another reason to stay in bed this morning, the Urban Institute’s analysis substantiates a widely-held millennial belief: You can’t rely on the government to have your back. We essentially have to create our own social security if we ever want to leave the workforce.
And we’re well on our way. According to CNBC, millennials in their 20s and 30s have better savings habits than the baby boomer generation, despite our reputation for being financially irresponsible. We fall short of expectations, however, when it comes to investing – mainly due to a lack of knowledge and confidence.
All we have to say is, Nana better keep making awesome cookies, because we’re paying for her to retire.