Why Many Americans Are Losing Sleep Over Social Security

More than 4 million Americans are expected to retire each year between now and 2027 — but not all of them are looking forward to this major milestone.

Roughly two out of five (39%) middle-class pre-retirees are concerned that Social Security benefits will run dry in the future, according to a 2024 survey by the Transamerica Center for Retirement Studies.

A Tenuous Situation

Social Security benefits make up nearly a third (30%) of income for the average American over 65, according to the Social Security Administration (SSA). If Social Security benefits are reduced it could have a marked impact on middle and lower-income retirees.

Concerns of Social Security funds running out have hung over retirees for years, and they aren’t unfounded. In May, the SSA warned Social Security benefits would run short of funds by 2035, barring a change in federal policy. That doesn’t mean Social Security benefits would cease altogether, but they would be reduced to 83% of the scheduled payment.

This looming prospect may be why about a quarter of eligible individuals begin collecting Social Security benefits at 62, even though waiting until age 70 would increase benefits by about 30%, per 2023 SSA data. Meanwhile, life expectancy has risen overall, so even those who wait as long as possible to collect benefits may need to stretch their savings for decades.

Think About the Future

The potential shortfall of Social Security serves as a reminder that personal retirement savings are key to planning for life after work. Be it through employer-sponsored 401(k) plans, pensions, which remain popular in certain industries, individual retirement accounts (IRAs), or other savings vehicles, making a financial plan for the future can pay off big time.

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