Half (50 percent) of the millennial generation do not believe that Social Security will exist when they reach their retirement age. These are the results from the “Measure of Millennials,” study released by the iOMe Challenge organization.
The study of a representative sample of 642 18-29 year olds across the U.S. was conducted by the St. Norbert College Strategic Research Institute. In addition to the 50 percent who do not think Social Security will exist 28 percent think that Social Security will exist, but that the benefits will be much smaller than today. Only 5 percent think Social Security will exist and at the same benefit level as today and 18 percent are not sure what will happen with Social Security by the time they retire. When the views of millennials on the future of social security are juxtaposed with the shift from a defined benefit retirement model to a defined contribution model among employers, it is clear that for millennials providing for retirement is going to rest far more on the individual’s shoulders.
The thinking of the millennial generation and current trends indicates that the three-legged stool model (Social Security, employer provided pension and personal savings) that many in the baby boom generation relied upon for retirement planning is now down to one primary leg, personal savings and investment.
Ultimately the millennial generation will need to personally save or invest at higher levels than the baby boom generation. However, at this point in their lives, millennials find it a challenge to save at higher levels. Currently 42 percent are setting aside some money for retirement each month. The amounts however are quite modest. Among the 42 percent who are setting some money aside each month, the median amount being set aside is just under $75. About half (52 percent) of millennials say they have not given any thought to how they will finance their retirement because they are focused more on meeting their current financial obligations.
Among those who are working full-time 57 percent indicate that their employer does provide them with some retirement benefits. In addition, 44 percent of those employed full-time do say they are investing money for retirement outside of what their employer may be providing.
Views on Social Security vary by several demographic and political factors. Women are more likely (55 percent) than men (44 percent) to think Social Security will not exist when they retire. On average 45 percent those aged 18 to 21, 56 percent of those age 22 to 27 and 45 percent of 28 and 29 year olds think Social Security will not exist when they reach retirement age. Millennials with incomes between $41,000 and $60,000 are the most likely to think Social Security will not exist when they retire. Sixty percent of Millennials who identify with the Republican Party compared with 45 percent of Democrats think Social Security will not exist when they reach retirement. In terms of employment, those who are working full-time are the most likely to say that Social Security will not exist when they reach retirement age; 53 percent of those employed full-time, 47 percent of those employed part-time and 48 percent of those not employed do not think Social Security will be available when they retire. Those who are currently enrolled in technical school or college do not have substantially different views on the future of Social Security than those not enrolled.
Those who do not think Social Security will exist when they retire are also the least likely to be setting money aside for their retirement. Less than half (40 percent) of those who do not think Social Security will exist when they retire are setting any money aside for their retirement, while 48 percent of those who think Social Security will exist but with lower benefits are setting money aside and 55 percent of those who think Social Security will exist and at the same benefit levels are setting money aside.
The findings from this study suggest that there has never been a more important time than now to engage millennials in helping to solve the financial challenges we face in the U.S. and the potential problems they may face in their retirement years. The iOMe Challenge seeks to do just that as a national think tank focused on challenging college students and millennials to change the world by investing in their future today. The organization is working to engage young people to understand financial problems and find creative ways of solving them.
The iOMe Challenge organization was formed by a group of concerned citizens, business leaders and academicians to engage and challenge young people to begin thinking about their financial future. Sponsors of the iOMe Challenge include: Ally, PAi, Sage, American Society of Pension Professionals & Actuaries, the National Association of Government Defined Administrators and St. Norbert College. Further data to be released from the survey addresses what strategies Generation Y uses in handling their finances.
The analysis in this report is based on a national online representative sample of adults aged 18-29 in the United States. The survey was implemented in partnership with Toluna research (www.toluna-group.com
). The online survey was conducted August 22-24, 2011. The representative sample included 642 completed surveys. The sample was weighted to more closely match the overall demographics of this age group nationally. The questionnaire was designed and hosted by the St. Norbert College Strategic Research Institute (www.snc.edu/sri
) using Qualtrics software. Respondents for
this survey were selected from among those who have registered to participate in Toluna’s online surveys
and polls. The data have been weighted to reflect the
composition of the millennial generation. Because the sample is
based on those who initially self-selected for participation in the
Toluna rather than a pure probability sample, no estimates of sampling error can be calculated. All sample surveys and polls may be subject to multiple sources of error, including, but not limited to sampling error, coverage error, and measurement error.