As life expectancy climbs, Social Security must adapt or cease to exist.
Today, the average American lives to be about 79. Experts predict that babies born today will live into their late 70s and early 80s. With life expectancy rapidly increasing, social security is in danger.
There are many reasons why humans may be living longer, according to The Ageless Generation. The book credits massive convergence of technologies and health consciousness, among other factors, to increased life span.
Massive convergence of technologies such as cell phones and the various features they offer, biomedical discoveries like cellular reprogramming and tissue/organ engineering, and 3D bioprinting, using the patient’s own cells to build new organs, can all extend life.
People are becoming more health conscious, too. Obesity and smoking are huge negative factors to life expectancy, but in the United States, cigarette sales have steadily decreased. As acceptance and non-discrimination campaigns come out, more people are taking notice of the foods that have poor effects on their health.
Improvements in health have a lot to do with increasing life expectancy, according to a study by the Gerontologist. This begins with less young people receiving infectious diseases and dying. Once most of the deaths from infectious disease were phased out, cancer and cardiovascular diseases then became the main causes of death. In turn, becoming the focus of medical treatment. Life expectancy, in the last decades of the 20th century, increased because of people dying less from heart disease.
Phillip DeCicca, professor of health economics at Ball State University, says people are practicing healthier lifestyles. Smoking rates are in a downward fall. In addition, medical technology is rapidly improving.
“People now don’t die over the things they did before, because they are caught by improved imaging technology,” DeCicca says.
“Over the past half century in the United States we’ve seen life expectancy increase and that has gone along very closely with increases in education and increases in income,” says Erik Nesson, professor of economics at Ball State.
According to a press release from The Social Security Board, workers will be continuing to pay into the Social Security system past 2034, which is the year they project the country is going to run out of social security. All of that money will go straight to the retirees. Only 77% of the expected payouts will be covered by that money. Over 63 million Americans who are retired and disabled as well as their families receive social security based on public funds to provide economic stability.
If social security does run out by 2034, then Generation Z might not even know a world where they can plan on receiving those benefits.
DeCicca says that the main issue fueling the problem with social security is that America doesn’t have enough workers relative to the number of retirees.
The AARP lists multiple proposals to conserve the future of Social Security. Two possible options are longevity indexing and means testing. Longevity indexing will immediately change Social Security to pay smaller monthly benefits as lifespan increases. A couple ways that longevity indexing can be done are by changing the benefit formula or raising the age when a person is eligible for full or unreduced retirement benefits. It’s estimated that indexing the full retirement age for longevity will increase it by one month every two years.
Means testing is the process of the government determining if an individual is eligible for financial assistance based on their income level. Means-testing Social Security would reduce benefits for higher-earning people and could even terminate all the benefits for the households that accumulate the highest earnings.
DeCicca stated that he didn’t think social security would run out completely, but that it just wouldn’t be given as generously as it is now. According to DeCicca, we may need to make hard choices in the future. He suggests means-testing the benefits as one of the first choices people will have to face.
Rebecca Conrad, a senior economics student at Ball State, firmly believes that Gen Z is more aware about financial issues due to the impact of the 2008 recession on their families and how they grew up hearing about how Social Security will be depleted by the time they retire. They also have to worry about the extra pressure to get a job with good benefits and saving early for retirement.
“We don’t expect long-term security the way our parents and grandparents did,” Rebecca says.
DeCicca suggests that young adults think about social security and prepare for it to either diminish or go away completely. He advises to save money early to accumulate interest. If adults start saving in their 20s, the accumulation will have significant benefits when they retire.
Gen Z is discussing savings plans more than past generations, with more of them actually taking action by saving their money. A survey from the National Society of High School Scholars reported 35% of Gen Z plan to start saving for retirement in their 20s, while an additional 10% are planning to save as teenagers.
This rings true for Rebecca. “I’m motivated to manage my money because of the future expenses I know I’ll be encountering,” she says.
Rebecca is applying for law school, which she knows is going to be an expensive journey. Many college students know why it’s important to save money, but not all of them have the necessary resources to do so.
Rebecca proposes that many students don’t save because they are faced with immediate expenses and the reward of savings comes in the future. It’s difficult for college students to focus on their future security when the most prominent issue is getting their rent paid.
“In the future, I’ll probably want to do things like buy a house and a car, things that won’t be possible if I manage my money poorly or accumulate debt now,” Rebecca says.
