Social Security faces a stark generational divide on how to save it

Americans like Social Security, but no one wants to pay for it, a new survey shows.

To keep Social Security, 53% of Americans under age 30 say they’d rather cut benefits for current retirees than pay more taxes to help keep benefits intact, according to a survey of 2,000 adults by the libertarian think tank Cato Institute. In contrast, 89% of seniors aged 65 and older said younger workers should pay higher taxes to help keep current retirees’ benefits steady.

Social Security benefits are in danger of getting a more than 20% haircut in 2033 unless Congress does something to shore up the program’s finances, but no one, including Congress, can agree on what reforms to make.

“There are no good options on the table,” said Emily Ekins, Cato polling director. “We only have a series of bad options.”

Do people even understand Social Security?

Further complicating matters, most Americans don’t seem to understand how Social Security works, the survey showed.

Half don’t know Social Security is a pay-as-you-go program in which current workers’ payroll taxes fund current retirees’ benefits—not the workers’ own future retirement, Cato said.

Nearly two-thirds of respondents believe Social Security is a mandatory retirement savings plan they pay for, polling showed.

One of five wrongly believe their payroll tax is “invested” in “The Social Security Trust Fund” until they retire. Eight percent think their taxes are saved in a personal account for them, and 21% admit they don’t know what happens to their payroll taxes. 

Almost half (43%) don’t even know what a payroll tax is, and only 17% know the tax is about 12% split between employer and employee, the survey said.

“There’s a profound lack of understanding, not just from the standpoint of mechanics but also the structure and how (the program) was initially designed,” Ekins said.

 What is Social Security?

Social Security is a federal anti-poverty program established in 1935 as part of President Franklin Delano Roosevelt’s New Deal after the Great Depression.

Social Security was never meant to be the only source of income for people when they retire. It replaces about 40% of an average wage earner’s income after retiring, according to the National Council on Aging.

Current workers fund current retirees’ benefits through the payroll tax. The Social Security Trust Fund is a government fund that holds excess payroll taxes used to pay for Social Security. When there were more workers paying payroll taxes than Social Security beneficiaries, excess funds were held in the Fund and invested in U.S. Treasuries.

However, this changed in 2010 when incoming payroll taxes were no longer enough to cover Social Security needs, and the government began dipping into the Social Security Trust Fund. The first Baby Boomers – the largest generation at the time — began taking Social Security in 2008.

And the U.S. population continues to get older. In 2025 alone, a record 4.18 million people are expected to reach 65. By 2050, the 65-and-older group is projected to increase 42% to 82 million from 58 million in 2022 and its share of the total population is projected to rise to 23% from 17%.

What can be done to save Social Security?

Over the years, policy experts have suggested everything from further raising the eligibility age for full benefits, cutting benefits, increasing taxes, or some combination of those ideas. No suggestion has ever reached consensus, and Americans’ lack of understanding the program hasn’t helped, Ekins said.

Without better understanding of what Social Security is, “the public cannot understand why Social Security is not a retirement savings program and why the system has such a significant shortfall,” she said. “This lack of understanding makes it more difficult for policymakers and reformers to build public support for necessary changes.”

Absent broader education on Social Security, Ekins said Congress should consider creating an independent nonpartisan commission authorized to study and enact reforms. Most Americans (71%) would support this option, Cato’s survey showed.

The commission would be similar to the Base Realignment and Closure (BRAC) Commission in the 1990s that Congress tasked with recommending how to close and consolidate military bases, Ekins said.

Delegating the job to an independent commission would also provide cover for politicians. If they “delegate and let the commission make tough decisions, they can say ‘don’t blame me! I would have voted against it,” Ekins said.