Despite the pandemic, optimism about Social Security and Medicare are at peak
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Confidence in social security and health care reached all-time highs among both workers and retirees, a sentiment that somewhat contradicted a Covid pandemic that has devastated the U.S. economy and the household finances of many Americans.
According to a survey published Thursday by the Employee Benefit Research Institute, around 72% of retirees and 53% of workers are reasonably or very confident that Social Security will continue to provide the same benefits in the future.
This is an increase from the recent lows of 45% and 28% three years ago.
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The numbers for Medicare were similar. Three in four retirees and 56% of workers were convinced of the government programs in 2021 – up from 46% in 2018 and 34% in 2018.
Constant advantages in the face of extremes – millions of jobs lost, more than 570,000 virus deaths, and the nosedive in the stock market in the early stages of the pandemic – have likely fueled a surge in optimism, according to Lisa Greenwald, CEO of Greenwald Research, who led the field Survey 2021.
“Social security – a ‘main source of income’ ‘for more than 6 in 10 retirees – continued uninterrupted during the pandemic,” Greenwald said.
In the meantime, social security recipients also qualified for state stimulus tests. This grant was granted for up to US $ 1,200, US $ 600 and US $ 1,400 per person, respectively, over the three rounds last year.
These results from the EBRI survey, which was carried out for the 31st time, are in line with some of its broader results.
For example, around 80% of retirees are confident they can live comfortably throughout retirement – more than the 76% surveyed in March 2020, according to the survey.
“When we first saw these high confidence numbers, I found them counterintuitive,” said Craig Copeland, senior research associate at EBRI and co-author of a report. “2020 was such a difficult year for so many reasons.”
Social Security Trust Fund
But trust is a feeling – and it may not match reality, said Copeland.
The trust funds that pay social security benefits are under stress. A year ago, Thursday, the Social Security Agency estimated that their trust funds could be depleted in 2035.
That doesn’t mean the benefits will go away. At this point in time, 79% of the promised benefits would be payable. Wage taxes would continue to fund these amounts.
Some have speculated that the expiration date could be earlier due to the economic aftermath of the Covid-19 pandemic. However, the legislature is considering measures to shore up the funds and prevent this outcome.
However, the broad optimism of retirees makes sense financially, Copeland said.
The stock market rebounded from its early slip last year and retirees tended to be more conservative in investing, he said. Retirees also spend most of their discretion on travel, leisure and entertainment. All of this was cut back over the past year and likely resulted in lower spending.
However, the recession in Covid is having different effects on different segments of the US population.
Some – namely the rich, whites, and college graduates – are doing just as well, if not better, than they were before the pandemic. Other groups of workers – the poor, minorities and those with less education – are still faced with job losses.
The unemployment rate improved to 6% in March and the US economy added 916,000 jobs, most since the summer. However, as of February 2020, more than 8 million jobs have yet to return.
About 6 in 10 workers who lost income or a job in the past year said the pandemic had negatively impacted their ability to save for retirement, according to EBRI. By comparison, only 1 in 8 people who did not lose income reported negative effects.
The survey polled 3,017 Americans 25 and older – half workers, half retirees – online January 5-25.