Social Security and Medicare: Will They Stand by Me?
Policymakers are beginning to debate what changes
should be made to the Social Security and Medicare systems to ensure
their long-term financial viability. Tough choices will eventually have
to be made by policymakers who must answer to the voters.
Confidence in Social Security is Low.
- Sixty-eight percent of Americans are not
confident Social Security will continue to provide benefits of equal
value to the benefits received by retirees today.
- Only 12 percent of all workers expect Social Security to be their most important source of income.
- Only 5 percent of generation X'ers expect Social Security to be their most important source of income.
- While 12 percent of workers expect Social Security to
be their most important sources of retirement income, 22 percent do not
expect it to be a source at all.
- Thirty-six percent of generation X'ers do not expect Social Security to be a source of income at all.
Americans Do Not Understand Social Security's Problems.
- Thirty-six percent of Americans reported
in the RCS that they are not confident that they have a good
understanding of how the Social Security system works.
- Fifty-two percent of generation X'ers are not confident versus 23 percent of pre-boomers.
- Respondents were asked what they believe the term
"trust fund exhaustion" means and were given two choices--(1) the system
will be completely broke and unable to pay any benefits (false) or (2) the system will have fewer assets and will have to pay out benefits at a reduced level (true).
- Thirty percent of Americans incorrectly chose (1) (in addition, 12 percent responded that they do not know).
- The younger the person the more likely an
incorrect answer. Forty-eight percent of generation X'ers chose (1)
versus 18 percent of pre-boomers.
Social Security Taxes versus Benefits.
The 1997 RCS asked respondents to make tough choices
assuming changes must be made to the system. When forced to choose
between higher taxes or decreased benefits:
- Sixty-three percent of Americans chose
increased Social Security payroll taxes for workers; 32 percent chose
reduced benefit levels for retirees.
- The majority of each generation chose increased payroll taxes.
- Sixty-seven percent of women chose increased payroll taxes, compared with 58 percent of men.
- Among those favoring benefit cuts, where to cut was fairly evenly split:
--33 percent favored raising the age for full retirement benefits to 70.
--37 percent favored reducing automatic cost-of-living adjustments (COLAs) that occur with inflation.
--26 percent favored cutting benefits for all recipients.
Respondents Are Worried about Medicare.
- Sixty-seven percent of Americans are not
confident that the Medicare system will continue to provide benefits of
equal value to benefits received by today's retirees.
- Forty-six percent of workers do not believe that the
Medicare program will still be providing health insurance when they
- Fifty-one percent of women do not believe Medicare will still be there, compared with 41 percent of men.
- Sixty-four percent of generation X'ers feel this way,
compared with 55 percent of late boomers, 42 percent of early boomers,
and 21 percent of pre-boomers.
- Thirty-six percent of workers are not
confident that they will have enough money to take care of medical
expenses when they retire.
HMO, Higher Taxes, or Later Eligibility?
How should we reform Medicare? When forced to choose, the
answers were similar across generations. However, retirees and workers
had very different responses when forced to choose among options.
- The most preferred reform was changing
Medicare to resemble a health maintenance organization (HMO) by using a
restricted network of health care providers, followed by increasing the
eligibility age for Medicare benefits from age 65 to age 67, followed by
increasing payroll taxes for current workers.
- Retirees consistently showed a lower
preference for HMOs than workers. When asked to choose between
increasing payroll taxes for current workers or changing the system to
resemble a restricted network HMO, 66 percent of workers versus 39
percent of retirees preferred the HMO. When asked to choose between
increasing eligibility from age 65 to age 67 or changing the system to
resemble a restricted network HMO, 65 percent of workers chose the HMO
versus only 34 percent of retirees.
Source: 1997 Retirement Confidence Survey.