Millennials and Retirement: The Social Security Problem


For several generations, Americans have relied heavily on Social Security in order to fund their retirement. And well they should, as they’ve been compelled to pay taxes into it in order to draw from it later.

However, the highly educated and under-employed segment of the population referred to as Millennials has mixed emotions regarding Social Security. They’re facing a great Social Security problem.

Millennials, to clarify, refers to Americans born between 1981 and 1996. That means the very youngest Millennial is 21, and the oldest is 37. That means we’re not talking about children: we’re talking about an age range between young adults and middle-aged adults.

It seems likely that Millennials will have to pay in more and will receive less than any previous generation. When adjusting for inflation and considering demographic shifts coming in the next 30-40 years, it becomes clear what the problem is. There will simply be so many more retirees compared to today that the Social Security fund will be depleted rapidly.

The Social Security Problem

What Will Happen to Social Security?

Odds are good that Social Security won’t be going away entirely any time soon. However, current projections show that after 2035 the current trust fund will be depleted, and something has to give. Whether that means the payroll tax that funds Social Security needs to go up or something else is still unclear. However, Millennials can expect to draw about two-thirds of what their grandparents have drawn in benefits.

That really stings considering how much more they’ll be paying in. Many solutions for the Social Security problem have proposed raising the full-benefit retirement age. Currently, those born after 1960 have to wait until they are 67 to draw benefits. We can expect to see that go up again, to 69, before the oldest Millennials hit retirement age. Millennials will thus have to pay in more to Social Security than any previous generation and will receive even less than those that came before them. This is understandably infuriating for them.

Why Is This Happening?

Social Security is being rapidly depleted as the average lifespan of Americans goes up, but the birth rate remains relatively static. This means that the retired population is growing faster than the working population. It’s a simple equation that shows that the current model for Social Security is unsustainable. Unfortunately, while the solutions to this problem are simple, no one will want to compromise to fix it.

What Can We Do About It?

Tongue-in-cheek nihilist memes regarding retirement plans are common among Millennials online. “Social Security’s running out? Guess I’ll die,” is a common joke, as is “the overthrow of Capitalism is my retirement plan.” While these are good for a quick laugh, they don’t address the very real and pressing problem of retirement for Millennials.

The best advice for Millennials worried about retirement is to keep saving into other retirement plans. Roth IRAs, 401 (K)’s and the like are safe bets for retirement funds. While Social Security will likely still be around by the time they retire, Millennials will need to have other plans on tap for retirement.