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The Importance of Social Security in American Retirement

August 14, 2025, highlighted a significant milestone for Social Security, marking its 90th anniversary. A recent report published by the non-profit Transamerica Center for Retirement Studies (TCRS) has shone a light on how pivotal this program has become for many Americans regarding their retirement plans.

Understanding Public Perception

According to the findings, nearly 70% of Americans—specifically 69%—consider Social Security as a crucial component of their retirement income. Among those, 32% view it as their primary source of retirement funds. This statistic underscores the program's critical role in financial security for older adults. Catherine Collinson, CEO of the Transamerica Institute and TCRS, remarked, "Social Security has been the cornerstone of retirement income since its inception." This foundation not only signifies the importance of the program but also points toward the pressing challenges ahead, such as impending funding shortfalls.

Concerns About Funding Shortfalls

The looming depletion of Social Security trust funds presents significant anxiety among working-age Americans. A striking 71% of individuals not yet retired expressed worries regarding the availability of Social Security benefits when they reach retirement age. Concerns detailed by Collinson reflect a collective unease, urging policymakers to consider reforms that sustain the program for future generations. When asked about potential solutions, the majority recommended increasing the maximum earnings subject to payroll taxes (38%) and raising the Social Security payroll tax rate (35%). Only a minority, around 5%, believe that Congress should take no action at all.

Current and Future Retirees' Reliance on Social Security

The reliance on Social Security extends to various demographics, revealing that more than half of retirees (53%) currently rely on this program as their main source of income. Among individuals who have not yet retired, one out of four (25%) anticipate Social Security will be their predominant income source. This sentiment is particularly evident among those categorized as homemakers (37%) and the unemployed not seeking work (59%).

The survey results starkly illustrate a critical financial reality: 70% of future retirees believe they may work until retirement yet still fall short of adequate savings. Alarmingly, 42% of existing retirees report not having saved enough to support their retirement lifestyle.

The survey further discloses that individuals who are not yet retired manage to save an average of $51,000 in their retirement accounts. This figure varies markedly by employment status, with homemakers saving only around $16,000 while those actively working manage to save $65,000. In contrast, retirees appear to fare better with an estimated median savings of $126,000, excluding home equity.

Income Inequality and Social Security Dependence

Interestingly, reliance on Social Security fluctuates considerably across different income brackets. For instance, 52% of participants with a household income (HHI) of less than $50,000 identify Social Security as their primary income source, in stark contrast to just 13% for those earning above $200,000.

Women, in particular, demonstrate a heightened dependency on Social Security due to factors like the gender pay gap and caretaking roles that often hinder their ability to save adequately. The report indicates that 36% of women expect Social Security to be their chief source of retirement income compared to 27% of men. Moreover, almost 60% of retired women rely on this source, showcasing the gender disparity in financial preparedness.

Policy Implications and Future Outlook

As the anniversary of Social Security serves as a poignant reminder of its importance, the findings emphasize the need for immediate attention from lawmakers to implement necessary reforms. Collinson noted, "Americans anticipate benefits they have been promised, and by enacting reforms to address funding issues, we can help secure Social Security for generations to come." Addressing these concerns will not only affect current and future retirees but also impact the broader health of the nation's economy.

For more insights on the transformative impact of Social Security and the findings from the annual Transamerica Retirement Survey, visit the Transamerica website. This deep dive serves not just as an educational tool but as a call to action for both policymakers and the public to undertake necessary steps towards securing a financially stable future.