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Dec. 7, 2020, 10:50 a.m. EST

Many Americans don’t think Social Security and Medicare will be there for them

There’s a lot of skepticism about government entitlement—and with good reason

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By Paul Brandus, MarketWatch

Creative Commons

The federal government has always met its obligations to seniors. Social Security has been around since 1935, Medicare and Medicaid since 1965. But despite these long track records, most Americans seem skeptical that they’ll be around—at least in their present form—when they’ll need them.

That’s according to a study by MedicareAdvantage.com, which surveyed more than 1,000 adults in their 20s, 30s, 40s and 50s. Here are the key findings, followed by my observations.

1) ‘70% believe Social Security benefits will be cut or even eliminated by the time they retire’

Social Security won’t be eliminated. But there is concern that future benefits could be reduced. No less an authority than the Social Security trustees themselves warn that the system’s giant trust fund could be depleted by 2034. After that, Social Security would be dependent on whatever is coming in from payroll taxes—and the trustees think that would be enough to pay just 76% of scheduled benefits. But this estimate was issued before the coronavirus pandemic, which crushed millions of jobs and forced many Americans into early retirement. The net effect has been a squeezing of Social Security on both ends: more beneficiaries but fewer workers supporting them. This will accelerate the depletion of the trust fund. Read the latest trustees’s report on Social Security here .

And even without factoring in the pandemic, Social Security and Medicare’s future was wobbly because of simple demographics. Some 10,000 people are retiring each day and will for the rest of this decade. They’re also living longer. Again: Where will the workers to support them come from? With a decades-low birth rate and (current) efforts to curtail immigration, it’s unclear.

Read: Want to fix Social Security? Here’s a genius idea

2) ‘62% said the same about Medicare—that benefits will be cut or even eliminated by the time they retire’

By the time they retire? How about Jan. 1, 2021? Starting on New Year’s Day, Medicare reimbursement for dozens of health care providers are set to be cut anywhere from 1% to 10%. The Centers for Medicare & Medicaid Services (CMS) has finalized a long list of critical services, among them radiation oncology, physical therapy, anesthesiology, cardiac surgery, emergency medicine, gastroenterology and general surgery.

It’s too complicated to explain why in a short column, but a spokesperson for the American Physical Therapy Association, one of the organizations that is asking Congress to stop the cuts, says that smaller payments to health care providers could put some of them out of business. This in turn would make it more difficult for Medicare patients—includes veterans being treated in the community and uniformed service members covered under the military’s Tricare system—to get care. The impact could be particularly acute in rural and other underserved areas.

3) ‘52% said they would opt out of Social Security entirely if they were allowed’

Half? Christian Worstell of MedicareAdvantage.com tells me that “People are afraid they’re going to pay into Social Security for decades only to watch the program go bust and never receive a dime from it themselves.” Others, he claims, see Social Security as “government socialism,” though I suspect such views evaporate when the complainers start getting their own checks.

Read: This is what your Social Security check will look like next year — and why

4) ‘73% of adults feel like the government should be doing more to support them’

Presumably this doesn’t include those complaining about “socialism,” but it’s a reflection of a painful truth, namely that the vast majority of Americans aren’t financially prepared for retirement. The 2019 Survey of Consumer Finances, for example, says that retirement savings average just $408,420 for households in the 55-64 age range. But it’s the median figure that’s truly scary: just $134,000. Median, of course means that half of households in this age group have less than that. How do you stack up, by the way? Read this.

Here’s the disconnect: There are tens of millions of Americans who don’t have nearly enough saved. They want the government to do more. But many Americans already complain they’re overtaxed (actually, this is far from true ), and as I’ve mentioned, not enough new taxpayers are entering the system.

Read: You can still claim Social Security spousal benefits — even if your spouse is gone

President-elect Joe Biden has said that Social Security benefits should be expanded, and can be through higher payroll taxes on people earning more than $400,000 a year. But raising taxes requires cooperation from Congress. Democrats will have a majority in the House, but right now they only have 48 of 100 Senate seats. There are two Senate runoffs in Georgia on Jan. 5. If Democrats win both, the Senate will be 50-50, with soon-to-be Vice President Kamala Harris casting any tiebreaking vote. That’s probably the only path Biden has to raising payroll taxes. If Republicans win just one Georgia runoff, Americans who want the government to boost entitlement spending may be out of luck.

Paul Brandus is a columnist for MarketWatch and the White House bureau chief for West Wing Reports. Follow him on Twitter @westwingreport.

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