Joint Center for Political & Economic Studies ByWilhelmina A. Leigh & Danielle Huff Half of ages 18- consider themselves to be well-informed about the Social Security system. When compared to their older counterparts, however, these youngest American adults have more correct information about the big-picture impacts of the Social Security system than about various details of the system s operations e.g., age(s) at which one becomes eligible, how Social Security taxes are spent. Perhaps in part because of the large number of years between their current ages and the eligibility age(s) for Social Security, 18- to -year-old are less likely to view as major problems and more likely to view as minor problems known demographic and labor market factors that will impinge upon the system s solvency before their retirement years. These youngest adults also are more supportive than their older counterparts of selected reform proposals that could reduce the amounts that retirees receive in benefits from the Social Security system. Perhaps most importantly, when compared to older, these youngest American adults are simultaneously less likely to believe that Social Security will be their major source of retirement income and less likely to have begun accumulating other forms of retirement savings. There may be good reasons for this behavior, such as indebtedness from post-secondary education. It does not bode well, however, for the financial security of members of this age cohort during retirement. The Joint Center for Political and Economic Studies National Opinion Poll of American Adults About Social Security and Wealth identified these and other findings. The poll, conducted in late 00, surveyed 80 ages 18 and older. This fact sheet features the major findings about ages 18-, who constitute 18 percent of the survey sample. For additional information about and Social Security, go to http:// www.jointcenter.org/socialsecurity.
Social Security and Wealth: Fact Sheet About 18- to -Year-Old FIGURE 1 General Knowledge about Social Security among, by Age, 00 Q. In general, how well-informed are you about Social Security that is, the benefits available, who is and is not covered, and so on? Would you say that you are very well-informed, fairly well-informed, not too well-informed, or not at all informed? Very Well-Informed 18 0 Fairly Well-Informed Not Too Well-Informed Not At All Informed * s do not sum to 100 1 6 0 1 Knowledge All 1 11 1 1 6 0 0 18-6- 6-0* 1-6 6+ Source: Joint Center for Political and Economic Studies, National Opinion Poll of American Adults About Social Security and Wealth, 00. Although a majority of of all ages consider themselves to be very or fairly well-informed about Social Security, ages 18- are less likely than their older counterparts to report this belief. About half ( percent) of 18- to -year-olds believe that they are very or fairly well-informed about Social Security, compared to 0 percent of 6- to -year-olds, percent of 6- to 0-year-olds, percent of 1- to 6-year-olds, and 6 percent of 6 years and older (Figure 1). Nearly three-quarters ( percent) of 18- to -year-old know that Social Security is the biggest single source of income for most elderly. Comparable shares of older also know this fact. Two-thirds (66 percent) of 18- to -year-old agree that Social Security plays a major role in keeping many senior citizens out of poverty, a fact also known by similar proportions of older American respondents. ages 18- also are as likely as their older counterparts to know that the earliest age at which one can retire and begin receiving full Social Security benefits is 6. Thirty percent of 18- to - year-olds (and comparable shares of older respondents) are aware of this fact. However, 18- to -year-old are less likely than older American adults to have correct information about the details of the Social Security program. For instance, these youngest American adults are less likely to know that annual cost-of-living adjustments are made to Social Security benefits. Only two-fifths ( percent) of 18- to -year-old compared to nearly threefifths ( percent) of 1- to 6-year-olds and percent of ages 6 years and older are aware that Social Security benefits rise automatically as the cost of living increases.
Joint Center for Political & Economic Studies FIGURE Expected Major Source of Retirement Income among, by Age, 00 Q10. Looking ahead to your retirement, what do you expect to be your major source of income: Social Security, an employer-sponsored pension plan, or your own retirement savings and investments? 10 8 8 1 0 0 0 1 1 1 18 All * Ages 18- Ages 6-* 1 Ages 6-0 1 1 Ages 1-6* Source: Joint Center for Political and Economic Studies, National Opinion Poll of American Adults About Social Security and Wealth, 00. 6 1 0 Ages 6 and Older Social Security Employer-Sponsored Pension Plan Own Retirement Savings and Investments * s do not sum to 100 Although comparable proportions of the youngest adult age cohort and other age groups are likely to know that 6 is the earliest age at which one can retire with full Social Security benefits, 18- to -year-olds as a group are more likely than their older counterparts to erroneously believe that individuals can retire with full Social Security benefits while in their 0s and 0s. For example, 1 percent of 18- to -yearolds believe that one can retire between ages 0 and 0 and begin receiving full benefits, while only three percent of ages 6-0 and 6 years and older and two percent of 1- to 6-year-old share this erroneous belief. ages 18- also are less likely than of all other age groups to know that if an individual retires early, he/she can receive partial Social Security benefits. About half (8 percent) know this, compared to between 6 percent and 6 percent of respondents in the other age groups. Finally, American respondents ages 18- are less likely than those ages 1-6 and 6 years and older to know that 6 years is the earliest age at which one can retire and begin to receive partial Social Security benefits percent of 18- to -year-olds, compared to 6 percent of 1- to 6-year-olds and percent of ages 6 years and older. Interestingly, however, 18- to -year-olds ( percent) are more likely than 6- to -year-olds (1 percent) to know that one can begin receiving partial Social Security retirement benefits at age 6. Sources of Retirement Income ages 18- are less likely than respondents ages 6 years and older to expect Social Security to be their major source of income in retirement (8 percent compared to 0 percent). This youngest adult group (0 percent) also is more likely than respondents ages 1-6 (1 percent) and 6 years and older (6 percent) to expect their own retirement savings and investments to be their major source of income (Figure ).
Social Security and Wealth: Fact Sheet About 18- to -Year-Old FIGURE Investment in Stocks or Mutual Fund Shares among, by Age, 00 Q16. Do you own any stocks or mutual fund shares? 1 1 1 Yes No * s do not sum to 100 6 86 6 6 6 1 All 18-* 6-6-0* 1-6 6+ Source: Joint Center for Political and Economic Studies, National Opinion Poll of American Adults About Social Security and Wealth, 00. Although half of 18- to -year-old American respondents say that they expect their own savings and investments to be their primary source of retirement income, this age group is less likely than older adults to have begun to amass those savings and investments. For example, only 1 percent of American respondents ages 18- own stocks or mutual fund shares, which is significantly less than the shares among all other age cohorts (Figure ). Of those 18- to -year-old who own stocks or mutual fund shares, only five percent bought them primarily for retirement, percent bought them as an investment, and 6 percent bought them for both reasons. At five percent, American respondents ages 18- are much less likely than respondents ages 6-, 6-0, and 1-6 to report that they bought stocks or mutual funds primarily for retirement ( percent, percent, and percent, respectively). About one in every 1 (seven percent) ages 18- has invested in bonds. This bond ownership rate is significantly lower than the rate among 6- to 0-year-olds ( percent) and 1- to 6- year-olds (1 percent). Few American 18- to -year-olds have opened retirement accounts or signed up for employersponsored plans to save for retirement. About half ( percent) of 18- to -year-olds report that their employers offer retirement plans other than Social Security, such as 01(k) plans. Among 18- to -yearold respondents whose employers offer retirement plans, more than three-fifths (6 percent) participate in these plans. American respondents of all other age groups, in contrast, participate in their employers retirement plans at higher rates. For example, among older American respondents whose employers offer retirement plans, percent of 6- to -year-olds, 86 percent of 6- to 0-yearolds, and 8 percent of 1- to 6-year-olds participate in those plans.
Joint Center for Political & Economic Studies American 18- to -year-olds also are less likely than 6- to -year-olds, 6- to 0-year-olds, and 1- to 6-year-olds to have money invested in an IRA (Individual Retirement Account) or Keogh plan. 1 Only one in every nine (11 percent) 18- to -year-olds has invested in an IRA or Keogh plan, compared to one-quarter of 6- to -year-olds and 1- to 6-year-olds (6 percent and percent, respectively) and one-third ( percent) of 6- to 0-year-olds (Figure ). FIGURE Investment in IRAs or Keogh Plans FIGURE among, by Age, 00 Investment in IRAs or Keogh Plans among, by Age, 00 Q1. Do you have money invested in an IRA or Keogh plan? Q1. Do you have money invested in an IRA or Keogh plan? 11 6 1 Yes No * s do not sum to 100 88 1 6 0 80 All* 1 18-6- 6-0 1-6* 6+ Source: Joint Center for Political and Economic Studies, National Opinion Poll of American Adults About Social Security and Wealth, 00. Social Security Problems and Reforms In response to the statement In the future, there will not be enough workers to pay for the benefits that retired people receive, 18- to -year-olds are most likely to reply that this is a minor problem for the Social Security system. Nearly one-third (1 percent) of 18- to -year-olds view it as a minor problem, compared to 16 percent of both 6- to -year-olds and 1- to 6-year-olds, 1 percent of 6- to 0- year-olds, and 10 percent of ages 6 years and older. Respondents ages 18- are correspondingly less likely than all other respondents to perceive this as a major problem. About half ( percent) rate it a major problem, compared to 68 percent of respondents ages 6-, 6 percent of those ages 6-0, and 6 percent of respondents ages 1-6 and 6 and older. American respondents ages 18- also are more likely than older respondents to view the following as a minor problem: The percentage of older will double between now and 0. Thirty-four percent of 18- to -year-olds, compared to 1 percent of 6- to 0-year-olds, 1 percent of 1- to 6- year-olds, and 18 percent of ages 6 years and older, reply that this is a minor problem. 1 Individual Retirement Accounts (IRAs) and Keogh plans are tax-favored retirement savings plans. While IRAs are open to any investors, Keogh plans are limited to self-employed professionals or owners and employees of small businesses such as partnerships, sole proprietorships, and LLCs (limited liability companies).
Social Security and Wealth: Fact Sheet About 18- to -Year-Old Correspondingly, respondents ages 18- are less likely to see the doubling of the older population as a major problem for the Social Security system. About half (8 percent) of 18- to -year-olds view this as a major problem, compared to 60 percent of 6- to 0-year-olds and 6 percent of 1- to 6-year-olds. The same response pattern emerges when American adults are asked how much of a problem it is that money saved in the Social Security Trust Fund is being spent on programs other than Social Security. Although the treatment of unexpended Social Security taxes within the federal budget leaves the system open to the concern that its funds are being tapped for unintended purposes, the intensity of concern within the American population seems to vary by age. In particular, 18- to -year-olds are less likely than all other age cohorts to view this as a major problem and more likely to view it as a minor problem. Slightly more than half ( percent) view it as a major problem, compared to between 6 percent and 0 percent of respondents in the other age cohorts. Correspondingly, nearly one-third (1 percent) of 18- to -year-old respondents reply that this is a minor problem, compared to between 10 percent and 1 percent of respondents in the other age groups (Figure ). FIGURE Concern among, by Age, about Diversion of Money from the Social Security Trust Fund, 00 Q.. A number of reasons have been suggested for why the Social Security program may face financial problems in the future. Do you think it is a major problem, a minor problem, or not a problem at all that money saved in the Social Security Trust Fund is being spent on programs other than Social Security? or problem, or not a problem at all that money saved in the Social Security Trust Fund is being 1 1 All A 1 1 16 16 6 1 1 6 1 1 66 1 1 All * Ages 18- Ages 6-* 0 1 0 1 1 6 6 s* 10 10 0 0 6 6 Major Problem Minor Problem Not a Problem At All * s do not sum to 100 Ages 6-0 Ages 1-6* Ages 6 and Older Source: Joint Center for Political and Economic Studies, National Opinion Poll of American Adults About Social Security and Wealth, 00. When respondents are queried about specific unintended uses of Social Security taxes, many including 16 percent of 18- to -year-old and roughly the same proportions of American adults in all other age cohorts erroneously believe that Social Security taxes pay for the food stamp program. In addition, more than one-third of 18- to -year-olds (6 percent), as well as comparable shares of older American adults, believe that these taxes pay for the Medicaid program. The food stamp program provides low-income families Electronic Benefits Transfer (EBT) cards with which they can buy eligible food in authorized retail food stores. Medicaid is a federal/state health insurance program for low-income seniors, children, working families, and people with disabilities. 6
Joint Center for Political & Economic Studies The proportions of American adults who hold the erroneous belief that Social Security tax revenues support the Medicare and Supplemental Security Income (SSI) programs are even greater than the proportions who incorrectly believe that these revenues are used to fund the food stamp and Medicaid programs. Overall, however, when Medicare and SSI are considered, 18- to -year-olds are among the age groups least likely to believe that Social Security taxes are diverted to these programs. For example, about half of all between the ages of 18 and 0 (i.e., 18-, 6-, and 6-0) believe that Social Security taxes help support the Medicare program, and 6 percent of older than age 0 (i.e., 1-6, and 6 years and older) share this erroneous belief. Regarding the SSI program, 18- to -year-old ( percent) and older than age 0 (6 percent of 1- to 6-year-olds and percent of persons 6 years and older) are equally likely to believe that Social Security taxes support this program. American adults ages 6- (66 percent) and 6-0 (68 percent) are more likely to harbor this false notion. FIGURE 6 Opinion among, by Age, on Raising the Retirement Eligibility Age for Social Security, 00 Q6.1.Various policymakers have suggested different ways to ensure the solvency of the Social Security system. Do you agree or disagree with the proposed change: Raising the retirement age to become eligible for Social Security? All A 1 66 66 All * Ages 18- Ages 6-* 0 1 10 0 Agree Disagree * s do not sum to 100 s* 8 8 Ages 6-0 Ages 1-6* Ages 6 and Older Source: Joint Center for Political and Economic Studies, National Opinion Poll of American Adults About Social Security and Wealth, 00. 60 60 Despite the finding that ages 18- are less likely to view as major problems selected factors that could affect Social Security s future solvency, this cohort is more likely than older respondents to support various proposals to ensure solvency for the system. For example, nearly one-third (1 percent) of 18- to -year-old agree with the proposal to raise the retirement age for Social Security eligibility to ensure solvency (Figure 6). This represents much greater support than among 6- to 0-year-olds (0 percent) and 1- to 6-year-olds (1 percent). American respondents ages 18- also are much more likely than 1- to 6-year-olds and respondents ages 6 and older to support partially privatizing Social Security to ensure solvency percent compared to 18 percent and 16 percent, respectively. Medicare is a federally funded health insurance program that serves people with disabilities and the elderly. SSI is a federally funded program that provides benefit payments (not based on work history) to children and adults who have limited income and resources and are either blind, disabled, or at least 6 years of age.
Social Security and Wealth: Fact Sheet About 18- to -Year-Old In addition, about half (8 percent) of 18- to -year-old agree with the proposal to reduce the annual cost-of-living adjustment on Social Security payments to ensure solvency, a considerably higher proportion than among 6- to 0-year-olds (1 percent), 1- to 6-year-olds ( percent), and ages 6 years and older (8 percent). This finding is notable, considering that only percent of 18- to -year-olds are aware that there is an annual cost-of-living adjustment. Although the gap between percent (who are aware of the annual cost-of-living adjustment) and 8 percent (who agree with reducing the annual cost-of-living adjustment) is small, its existence indicates that some 18- to - year-olds favor changing a program feature that they do not comprehend. In late 00, the Joint Center for Political and Economic Studies conducted a National Opinion Poll of American Adults About Social Security and Wealth. The poll findings are presented in a series of publications, including the following set of fact sheets: American Women, 18- to -yearold, 1- to 6-year-old, and by Income Group. For ordering information about these fact sheets, contact the Joint Center s Office of Communications. All documents, as well as the survey methodology, will be made available on the Joint Center s website (www. jointcenter.org) upon publication. The Joint Center gratefully acknowledges the Ford Foundation, which supported both the National Opinion Poll and the creation and publication of these fact sheets. Copyright 006 Joint Center for Political and Economic Studies 100 Vermont Avenue, NW, Suite 1100 Washington, DC 000 www.jointcenter.org