Millennials Want Big Social Security Changes. Will They Get Them?

Source: Wikimedia Commons user Gphgrd01.

For almost 75 years, Social Security has paid regular monthly benefits funded by taxes collected by the program. Through the years, tax rates have increased to help provide the money necessary to pay an increasing number of Social Security recipients, but the basic structure of the program has remained much the same.

Yet amid the latest set of dour projections for Social Security, one demographic has begun to voice its own opinions about the program. It will be decades before millennials can claim retirement benefits under Social Security, but they have strong opinions about the future of the program and what must happen to ensure its survival. Some of those opinions call for major changes to Social Security as we know it, and the impact of those proposals on retirees and those close to retirement could lead to an intergenerational conflict about the program.

What millennials think about Social Security
The Reason Foundation and the Arthur N. Rupe Foundation recently studied the opinions of millennials aged 18 to 29 on a number of issues, and many of the respondents expressed significant concerns about Social Security's future. More than half of millennials surveyed said Social Security was unlikely to exist at all by the time they reach full retirement age, with only 45% believing the program will still be there when they need it.

Source: Flickr user itupictures.

Moreover, even among those who think Social Security will survive over the next 40 to 50 years, few believe the program will provide the benefits it pays to current retirees. Only about a third of millennials think they'll receive the same benefits Social Security pays now, while 64% express a lack of confidence about future payout levels.

A controversial proposed fix: private accounts
Millennials aren't alone in their doubts about the financial viability of the Social Security system over the long run, with the most recent Social Security Trustees Report stating that the program has less than 20 years left in which recipients can expect full benefits when they retire. The Trustees Report focused on working within the system to improve Social Security's financial condition, with measures including further increases in payroll taxes and various changes to future benefit calculations. Meanwhile, millennials favor more substantial changes to Social Security, including a controversial proposal to adopt private accounts for investing money that currently goes toward Social Security payroll taxes.

Source:  Flickr user itupictures.

Specifically, almost three-quarters of millennials surveyed believe Social Security should be changed to allow younger workers to use private accounts to invest the money they currently pay in Social Security taxes. By doing so, millennials hope to realize better returns than they'd receive under the existing system, all while ensuring that future changes to Social Security don't shortchange them based on the taxes they've paid.

Obviously, shifting money from the current Social Security system to private accounts would impact today's retirees, as a reduction in tax revenue going toward paying current benefits would lead to a much faster depletion of Social Security Trust Fund reserves. Yet even after the survey explicitly asked millennials about their views in light of the negative impact it would have on traditional Social Security benefits for current and future retirees, more than half still said they'd support private accounts.

Do-it-yourself Social Security
The topic of private accounts has been the subject of intense political debate, and a solution that reduces benefits for current retirees seems very unlikely to be approved. Without a major shift in political power, therefore, millennials aren't likely to get the changes to Social Security that they seek. The lesson that many millennials are learning here is that even as they continue to pay Social Security payroll taxes, they also need to set up their own private investing accounts to provide for their own future.

Unfortunately, millennials aren't generally the most comfortable with investments. According to a UBS survey, millennials have more than half their assets in cash, with just over a quarter invested in stocks. Interest rates are currently so low that cash accounts are gradually losing purchasing power to inflation, so millennials need to adjust their investing strategy if they want to make the most of their retirement savings.

In the meantime, though, people of all ages should expect continued tension between older and younger generations as the Social Security situation evolves. So long as the program remains financially endangered, Social Security will be a source of uncertainty for everyone who expects to receive benefits from it sooner or later.

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Read/Post Comments (31) | Recommend This Article (5)

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  • Report this Comment On August 09, 2014, at 7:17 PM, PonderingItAll wrote:

    Millenials may believe certain things about Social Security, but that does not make those thing true. The system just needs a little bit of adjustment and it will be fine, like any similar complex system.

    We already have retirement investment accounts: Roth IRAs, IRAs, 401ks, SEP-IRAs, etc. Feel free to supplement your Social Security by putting 10-15% of your income in such an account, where you can take any position you like. Think of Social Security as the most conservative portion of your retirement portfolio: As such, you really don't want to mess it up!

  • Report this Comment On August 09, 2014, at 7:43 PM, rtichy wrote:

    "Yet even after the survey explicitly asked millennials about their views in light of the negative impact it would have on traditional Social Security benefits for current and future retirees, more than half still said they'd support private accounts."

    How many of them have seen "Logan's Run"?!

  • Report this Comment On August 09, 2014, at 8:13 PM, crumbhead wrote:

    Just eliminate the income cap that's now around $117,000 or so and PRESTO! Problem solved.

  • Report this Comment On August 09, 2014, at 10:25 PM, emailnodata wrote:

    It hit me the other day...

    a baseline should have been set in the 1950's for "productivity". As productivity increased, which typically means displaced workers (by technology), corp social security taxes should have risen to account for that.

    It seems complex at first blush, but it isn't.

  • Report this Comment On August 10, 2014, at 12:31 AM, charlytuna123 wrote:

    The problem with private accounts, and there are actually many - but the one that is foremost in my mind is, what happens if the stock market as we know it, collapses. What happens if private accounts crash because of global changes in the economy and in the world - and the U.S. dollar becomes degraded. The stock market is one of the most volatile systems we know of - why would you trust your retirement funds to such an unstable future. If one global market crashes it will reverberate around the world. Social Security in old age should be guaranteed not dependent on the manipulations of the stock market.

  • Report this Comment On August 10, 2014, at 3:51 AM, franksalot wrote:

    ALL millennials should get two full time jobs so they can pay twice the amount in fica taxes so us SS retirees can sleep good at night knowing there is plenty of funds available to pay our earned monthly benefits and our annual COLA's.

  • Report this Comment On August 10, 2014, at 6:32 AM, thatlldopig wrote:

    It is amazing that the Millennials continue to echo the ideas of their Boomer parents. This debate raged in the 1980s as well. Boomers were also going to be the ones to solve the immigration, race, economic/demographic, and crumbling cities crises. I suspect that the Echoes will be as successful in these ventures as their parents were.

  • Report this Comment On August 10, 2014, at 11:54 AM, 112340 wrote:

    I am retired and have been drawing SS for eleven years. The program as it exists is inherently unfair. One flaw is that the less you put in-the more you get out. I had to go to the SS office a while back and I though that I was in the welfare office. I was the only person there who was over 50 and the people there were all talking about how bad things were and how much the government needed to help them. I understand that part of the program is to help when a parent dies or is disabled but this is out of control. Being a drunk or drug addict is not a disease. At least I do not see how you can go to a store and purchase a disease. That is voluntary and so are the health results. I invested a lot less than I did in SS and now draw a lot more than my SS check and now they want to tax my SS because I did what they asked me to do and this is just wrong. When I die, my children will get my investment account and I see nothing wrong with that after all it was my money that I worked for. SS just quits paying. The bottom 50% will typically take the money from their 401k when they change jobs and just pay the penalty instead of just rolling it over and get to retirement with nothing and then they whine because they have nothing and want everyone else to make it up for them. I do not see where this is my problem. During the Bush administration, the proposal was to let everyone form a type of 401k instead of SS and this was shot down even though almost everyone would have benefited from this. You may say that this is unequal but life is not about equal outcome but equal opportunity. If you are willing to do without to have latter you will just have more than others.

  • Report this Comment On August 11, 2014, at 3:08 PM, GeaugaTruck wrote:

    1) Eliminate Maximum earnings limit.

    2) Convert to a private account.

    3) Value of account inheritable (lump-sum) at death at any age.

    4) No minimum payout, you get only what you and your employer contribute plus accrued earnings & interest. When it's gone, it's gone.

    5) All and only working people covered, including government and public employees (universal coverage)

    6) SSI & Disability becomes separate and apart from retirement and funded by general fund monies.

    7) Estate gets inherited portion (lump-sum).

  • Report this Comment On August 11, 2014, at 3:28 PM, earth2sterling wrote:

    Well, good luck trying to get private accounts through congress. George W. Bush was called a murderer of grandmothers for suggesting that we take steps such as that to make Social Security solvent again.

  • Report this Comment On August 13, 2014, at 12:04 PM, watson14 wrote:

    The Millennials are going to repay for the public schools and universities they attended, correct? The ones that were built / payed for by their grandparents generation in my town, way before they were born?

    On another note, I did notice the social security office looking like a welfare office on my last visit. Are these the people who chose not to save for retirement because many, many were much younger than myself?

  • Report this Comment On August 13, 2014, at 12:08 PM, watson14 wrote:

    Just think if Bush had gotten the private accounts passed for Wall Street, just before he collapsed the banking system.

  • Report this Comment On August 13, 2014, at 1:51 PM, Golfnut0909 wrote:

    Instead of investing the trillions of dollars that have already been paid by the working people the government used it as their private bank account. It originally was not to be touched by the government. Now there is an issue and will run out of funding, what a shock!! It is really just a backdoor tax for the government to spend and let someone else figure out how to pay the benefits down the line. Anyone know which party tapped into it to start spending it.

  • Report this Comment On August 13, 2014, at 2:33 PM, notyouagain wrote:

    LOL sure, they support private accounts. So do I. Private accounts IN ADDITION to social security, that is.

    Most of these people will get far more from social security no matter how bad it does than they would if get from their own efforts, because most people have no investing skills/knowledge.

    A couple recessions like the last one will WIPE THEM OUT, just like the last one did to millions who didn't know what they were doing.

    Index funds? How many got scared and sold out of those during the worst of it? How much did they lose?

    How many people will suddenly get interested and learn enough to know that hanging on through deep recessions gives them their greatest returns?

    Anyone who reads a lot of Motley Fool articles and sets their mind to learning more will be fine.

    The general public, though, managing their "private accounts"?

    That's setting the scene for a disaster.

  • Report this Comment On August 13, 2014, at 2:51 PM, djlaino wrote:

    Three thoughts:

    1. Privatizing SS would produce one clear winner: so-called "financial advisers."

    2. Just imagine what your local street would look like if those SS office visitors didn't even have SS to live on. Take a good look at those folks and ask yourself, honestly, if you think think each and every one of those people would have been smart investors and be better off today if they just had an extra 6% each paycheck to personally invest?

    3. I am not concerned whether those who collect SS deserve it, but will simply be glad if I am in a position that I don't need it (whether I get it or not) when the time comes. I am planning my retirement assuming SS will not be there for me, and if that plan works, I won't complain if it isn't.

  • Report this Comment On August 13, 2014, at 2:59 PM, Mathman6577 wrote:

    Before Millennials (or any other group) start making demands on any "system" they need to actually start making positive contributions towards that system. From what I have observed they are in no position to dictate anything about Social Security.

  • Report this Comment On August 13, 2014, at 3:43 PM, notyouagain wrote:

    The question is, how many people who took an active interest in investing and learned what they were doing want to end up having to help the losers in the general population 30 or 40 years from now?

    You know, people that watch Cramer and think they can invest?

    You want them to be able to "opt out" and invest that 7% or 8% themselves, then have to help them later on down the road when it turns out they didn't do so well?

    Most of the general public would significantly underperform what they would have received from social security.

  • Report this Comment On August 14, 2014, at 6:31 AM, aintthatgreat wrote:

    Funding social security with a lump sum at birth, allowing it to grow over time in a government administered investment program that utilizes both equities and fixed income, may be a good solution for future generations. Social security needs to be de linked from lifetime earnings in order to provide a true safety net to the masses. If the millenials are concerned about their retirement options, they are going to have to learn about more issues than just gay rights and abortion.

  • Report this Comment On August 14, 2014, at 11:11 AM, Mathman6577 wrote:

    @aintthatgreat said it very well in his last sentence. I'm not sure why they chose to ignore financial planning to focus on what I call "fluff" issues. Maybe they just can't comprehend it effectively (similar to people who don't understand math) or are taking the easy way out because they are lazy? I'm leaning towards the "lack of knowledge" conclusion. Either way they need to stop demanding that the older generations meet their needs for retirement or any other issue. They didn't "build it" yet.

  • Report this Comment On August 14, 2014, at 11:31 AM, StoneyTerp12 wrote:

    The first question that needs to be addressed before anyone talks about "fixing" social security, is what is the role of social security? Is it supplemental retirement and safety net, or is a wealth redistribution? I'm not saying either are right or wrong, but the answer to that question drives your solutions to the problem. Obviously there are varying opinions and we won't ever all agree, but until we have an honest discussion of the role of social security, coming up with solutions seems premature.

  • Report this Comment On August 14, 2014, at 12:00 PM, dreamimmigrant wrote:

    Give the option to privatize... the government is already using my contributions as a private bank. They were not supposed to touch contributions to this "trust fund".... but guess what, they did! I don't trust them a bit... I'm far better with my money than the government. Those who feel that the government is better with managing their money, please feel free to. But give me the option to manage my own money instead of extorting it from me. Thank you.

  • Report this Comment On August 14, 2014, at 3:01 PM, RouteReflector wrote:

    The vast majority of people providing their opinion in any financial issue have no clue what they're talking about.

  • Report this Comment On August 15, 2014, at 1:27 PM, gskinner75006 wrote:

    "Do-it-yourself Social Security"

    This doesn't work. Period. It never has. Do-it-yourself has been around since the first coin and a shovel to dig a hole to put it in. If do-it-yourself worked, we would not have Social Security.

  • Report this Comment On August 15, 2014, at 4:37 PM, LMacKenzie wrote:

    Did anyone explain to them how Social Security actually works? Because the ignorance I've encountered among young people and not so young people (including many commenters above) about this program is significant.

    They think they are paying for themselves. They are not. They are paying for their parents and grandparents - and other people's parents and grandparents.

    They think the program is a failure. It is not. It has been hugely successful. Most people in poverty in the US today are children, not seniors.

    They seem to believe that the stock market is safer than Social Security. I cannot even guess why they would think that, as they've lived through 9/11 and 2008. Furthermore, one doesn't have to look very hard to see jobs and industries being off-shored.

    How about asking them this: Would you rather invest in a shared social security system that keeps everyone's head above water or would you like to take in your parents and elder relatives when they hit 65 and support them until the end of their life? After all, they supported you.

  • Report this Comment On August 15, 2014, at 4:38 PM, dreamimmigrant wrote:


    Start with yourself and speak for yourself.


    Speak for yourself.It works me, my family and my parents. We don't get anything from social security.

    You guys thing you know what's best for me. Give me a break, if you want - you give all your money to the government so they can take care of you. I'm pretty good with my money and I don't want to give it to an entity that can't even balance a budget and needs to run a ponzi scheme to keep cashflow.

  • Report this Comment On August 15, 2014, at 5:47 PM, RxPro wrote:

    Yes increase taxes to fund SS, that's a great fix. Or maybe take an intelligent approach that helps everyone.

    Some type of privatization is needed, although if everyone privatized, there would be no incoming funds. So the obvious fix is hybrid solution.

    Allow maybe a 50 or 75% opt out. SS taxes are reduced by 50 or 75% as well as your employers contribution. HOWEVER, since this may create bias for employers, the employer would be mandated to contribute that reduction into a 401k for the employee (private account). The employee would get to do whatever they want with their additional money (win for the employee, tie for the employer). Then their social security award upon retirement would be decreased by the percentage they chose. This would be a STEP to moving everyone toward private accounts while still keeping funds incoming.

    Its a rough idea, but it would work a hell of a lot better than the current system. For someone like me, social security is worthless and yet I will still have to collect from it even if I don't want to.

  • Report this Comment On August 16, 2014, at 9:45 AM, gskinner75006 wrote:


    It works for me too. Retired at 52. Don't care if I get anything from SS or not. It's not factored into the retirement plan. I was speaking about the average person. Sorry to have upset you.

  • Report this Comment On August 18, 2014, at 5:50 PM, TheDumbMoney wrote:

    I hope this does not happen, and don't think it will.

    1) As mentioned above by another commenter, SS can be fixed with much more minor tweaks.

    2) The history of 401ks suggests millennials and everyone else will do a terrible job with a self-managed account.

    3) Millennials are likely failing to consider how the aid that SS has provided to their grandparents and even parents has reduced the burden on them to provide support. Thus, though they may fear for their own benefits 40 years from now, in reality a great many (including me, though I'm a bit older than a millennial) have already benefited.

    SS is best viewed as insurance against our own stupidity. Like all insurance, it costs money! If you blow up your 401k, if you don't save, if you have wild medical emergencies for which you are uninsured, SS one day will be there to make sure you are not living on the train tracks when you are 70. That sort of insurance costs money, in the case of SS, the cost is expressed in lower but clearer returns.

    Combine that with the fact that SS really only needs some relatively minor tweaks to allow revenue to cover cost for another 50 years, and I think the Millennials are either ignorant or have been bamboozled.

  • Report this Comment On August 20, 2014, at 2:51 PM, DanFPilot wrote:

    To answer the question, No this will probably never happen. Which is unfortunate. Too many people are ignorant of and disdainful/fearful of the stock market, which is evident by the above posts.

  • Report this Comment On July 27, 2015, at 7:56 PM, BrookPutnam1 wrote:

    Millennials are disgusted with the current state of Social Security and are growing increasingly bitter with a future that guarantees them far less benefits than previous generations received. It is time for Millennials and Generation X'ers to demand the right to opt-out! Go to and sign the petition to opt out of Social Security!

  • Report this Comment On July 27, 2015, at 8:33 PM, devoish wrote:

    The only reason SS cannot pay for a dignified retirement is that is it funded by a percentage of wages that do not provide a dignified life to begin with.

    If from 1968 forward wage growth had kept pace with productivity SS would be lowering the retirement age and raising benefits.

    Millennials know this to be true the moment they hear it, and they will hear it because they need to get paid today, and tomorrow.

    Hope that helps,


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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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