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By Suzanne Blake
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Baby Boomers have sparked a notable change in the Social Security program.
While experts previously anticipated funds would run out to pay full benefits in 2034, the Social Security Administration updated this prediction and said funds would actually not become insolvent until 2035, a year later.
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At this point, if nothing changes, the retirement benefit program would only be able to pay 77 percent of promised benefits to seniors who rely on the monthly income.
But why did the insolvency date move up, despite the increasing numbers of Baby Boomers reaching retirement age?
Baby Boomers themselves are working longer, said Steve Goss, chief actuary of the Social Security Administration.
Goss said on one hand, the economy improving and bringing in more revenue was helpful to Social Security's dwindling financial supply, but Baby Boomers also played a role in the changing deadline for the program.
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"Employment rates have been very strong, and one of the things that's been really good... is the Baby Boom generation upon us, elders, are working at higher ages now," Goss said during today's hearing on Medicare and Social Security solvency.
According to recent Pew Research and Gallup data, 19 percent of Americans aged 65 and older were still working last year, which is nearly double the rate of the late 1980s.
And in the same year, 2023, the average retirement age was 62, an increase from 59 just roughly 20 years ago.
"One of the sad realities of our current economic landscape is in recent years there have been many Baby Boomers who have been unable to enjoy their golden years in the same way as the generation that came before them," Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek. "Rising costs and more debt have been a deadly combination that has led many of them to stay in the workforce to be capable of continuing to have their current standard of living."
The Medicare trust fund saw similar improvements as Baby Boomers decide to work longer and often into retirement. While originally it had indicators it would be depleted by 2026, new reports estimate it has an extra 10 years of life before running out of money.
The move to work later is not just helping Baby Boomers as they look to their own Social Security checks but could have positive effects for younger generations as well, Beene said.
"Living expenses aren't getting any cheaper, and many Americans continue to want to maintain the lives they've cultivated and not cut back as much as some prior generations did in retirement," Beene said. "Social Security still has some serious long-term solvency issues to work out, but generations of Americans that work longer are going to be able to help soften the blow of a funding pitfall."
Drew Powers, the founder of Illinois-based Powers Financial Group, said he sees many of his own clients opting to work longer, especially as the look of retirement changes compared to previous generations.
"As they say, 70 is the new 60," Powers told Newsweek. "With advancements in healthcare and technology, Baby Boomers today find it easier to work at an age where their parents, the Greatest Generation, would have found it difficult if not impossible. And with a strong economy, there is also a feeling among my clients that if they stay healthy, then there is no reason to retire until the current cycle ends."
Many Baby Boomers aren't necessarily working longer out of their own volition, however. While previous generations often worked for the same employer for decades and received a fixed pension, that employer-provided security is typically gone for today's retirees.
"Those pensions were replaced by the 401k, and those accounts have seen multiple boom-bust cycles from the Dot-Com Bubble to the Covid Crash," Powers said. "As the Boomers put off collecting benefits, it helps the Social Security fund from being depleted. Of course, these folks will eventually collect benefits, so the insolvency crisis is always looming."
Kevin Thompson, a finance expert and the founder/CEO of 9i Capital, said a large segment of seniors are working because they planned until retirement but failed to think about the day in and day out of life after retirement.
"They did a good job planning to retirement, but a poor job planning for retirement, meaning they truly do not know what their day-to-day lives look like and therefore push off the inevitable," Thompson told Newsweek.
Still, Thompson doubts seniors staying in the workforce will have a material impact on Social Security funding in the long run.
"The individuals often working are the ones needing to supplement their fixed expenses and are likely taking social security while in the workforce," Thompson said. "The amount of money going back into the system and money coming out of the system will be offset slightly, but not materially."
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