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Social Security Debate: What Should Gen X and Millenials Need to Know

Gen X and Millenials

The program’s looming shortfalls, will have a far greater impact on Gen X, Millenials, and future generations. (Photo:

Reforming Social Security is primarily an issue of concern to older Americans. However, any changes in the U.S., Whatever steps Congress takes to address the program’s looming shortfalls, will have a far greater impact on Gen X, Millenials, and future generations.

Younger workers will require Social Security even more than the millions of baby boomers currently receiving benefits.

The layoffs would be especially harsh on today’s Gen X, Millenials, and people of color. According to Urban Institute projections, 49% of “early millennials” born between 1980 and 1989 would lack the income required to meet basic living expenses. The figure rises to 53% and 62%, respectively, for Black and Hispanic adults in that age group.

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Smaller Social Security checks are already baked into the cake for Gen X and millennials due to Congress’s 1983 reforms. That legislation established a progressive increase in the Full Retirement Age (FRA), or the age at which you are eligible to receive 100% of your benefit. Before 1983, the FRA was 65, but it is now 67 for anyone born in 1960 or later. Every 12-month increase in the FRA corresponds to a 6.5% reduction in benefits.

Other factors, however, are also putting younger workers at a disadvantage. “Millennials and future generations are already facing fairly uncertain retirement prospects,” said Richard Johnson, senior fellow and director of the Urban Institute’s Program on Retirement Policy. “They haven’t seen the same earnings growth as previous generations, which has a big impact on how they’ll do in retirement and how much money they’ll get from Social Security.”

A report co-authored by Johnson also highlights the deterioration of traditional defined-benefit pensions and the impact of the 2008-2009 global financial crisis, which wiped out trillions of dollars in household wealth and caused long periods of unemployment. That crisis was tough on younger workers, and the consequences are still being felt today.

38% of early millennials will have insufficient income to meet their basic living needs when they reach the age of 70, compared to 39% of late Gen Xers (born between 1973 and 1979) and 28% of late boomers (born from 1955 to 1964). The situation is even worse for early millennials of color, with 53% of Hispanic adults and 42% of Black adults reporting financial difficulties. And those projections assume that Congress will find a way to avoid benefit cuts in 2035.

Johnson notes that specific positive trends could help to brighten the forecast, like the continued growth of dual-income households and the tendency to work longer hours.

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