Young and worried about Social Security? Here’s what Gen Z should know.

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Generation Z has decades to go before they can begin claiming Social Security, but almost half of the people in that group don’t think they’ll get any benefits when the time comes.

Younger generations are skeptical about their chances of receiving Social Security: About 40% of millennials and 45% of Gen Z members said they don’t think they’ll collect any Social Security benefits, according to a recent Nationwide survey, and more than three-quarters of both groups said they expect to work into retirement because Social Security “will not pay enough,” the survey found. 

“There is a strong degree of pessimism,” said Tina Ambrozy, senior vice president of strategic solutions at Nationwide. These workers are “feeling like they’re not going to get a dime of what they’ve invested.”

The program could evolve by the time Gen Z gets to retirement, so younger people will need to be flexible in how they expect Social Security to fit into their retirement plans. The trust funds that support Social Security’s disability and retirement benefits are expected to run out in about 11 years, at which point beneficiaries would receive a reduced amount every month — unless Congress takes action on one of the legislative ideas floating around for how to improve the program. 

See: If they come for Social Security and your retirement accounts, this is how they will do it

Older Americans are also unsure about how much they will be able to rely on Social Security. Three-quarters of Americans 50 and older said they thought the program would run out of funds in their lifetimes, up from 66% in 2014, according to Nationwide. The concerns around Social Security and its solvency have grown in the last 10 years that the survey has been conducted, Ambrozy said. 

Many Americans are also worried about whether their Social Security benefits will be enough to live on, but the program was never intended to be the main or only source of retirement income, Ambrozy said. 

When Social Security was created almost a century ago, retirement income was referred to as a “three-legged stool”: Social Security, pensions and personal savings. In the last few decades, however, many companies have moved away from private pension systems, and the responsibility of saving enough money for retirement has fallen on the individual.

Many people also rely heavily on Social Security for most, if not all, of their retirement income. For about a quarter of older adults, the program represents 90% of their income, even if their monthly benefit is less than $2,000.

Still, there are ways to plan for whatever the future might hold, advisers said. 

“Social Security is too much of a sacred cow to ever go away. However, it certainly will be changed or altered,” said Rodney Loesch, a certified financial planner and a partner at LifeGoals Strategies Group. Members of Gen Z may want to delay their retirement until age 70 — for those born in 1960 or later, full retirement age is currently 67 — and to estimate their benefit at some fraction of current levels. 

Also see: This is what should happen with Social Security

Loesch suggested that young people should assume they’ll receive 50% to 60% of current benefit levels but noted that the figure will be different for everyone. Another estimate is that benefits will be reduced by 25%: The Social Security trustees’ report that estimated the trust funds would run out by 2034 also said the projected benefits would be about 75% to 80% of what beneficiaries will be owed. The trustees’ report comes out annually, and estimates can fluctuate from year to year, too.

“At the end of the day, there are so many variables that play a role in the retirement math for Gen Z that it’s quite difficult to focus too much energy on Social Security projections,” said Randy Bruns, a certified financial planner and founder of Model Wealth. 

A “doomsday approach” of assuming there will be no Social Security benefits in the future would force workers to save too much, he said, but creating an appropriate financial plan utilizing various vehicles such as a Roth retirement account and a health savings account, when available, could help. 

Instead of focusing too much on the numbers, “younger generations should focus on what they can control — budgeting and saving diligently,” said Cameron Valadez, a certified financial planner. “If younger generations can do that, Social Security can be seen as icing on the cake to add to further discretionary spending in retirement.”

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