State government is preparing to provide better care for retirees in the coming decades, at a time when many young people are concerned for their financial security at the end of their careers.
With the rising student debt levels and the projected depletion of the nation’s Social Security Trust Fund, some college students expect a difficult retirement, and a new legislative committee hopes to alleviate stress for current and future retirees.
The Minnesota House of Representatives will introduce a new committee next session devoted to programs for people in retirement. Rep. Joe Schomacker, R-Luverne, will chair the new Aging and Long-Term Care Policy Committee. The committee will focus on funding and facilities that provide long-term care for retirees and improve the quality of caregivers.
And with the impending depletion of the Social Security fund, securing a successful retirement isn’t only on the minds of those near it now. It is something young people are increasingly considering, experts said.
A study by the Transamerica Center for Retirement Studies found that 81 percent of working millennials are concerned Social Security will not be there by the time they retire.
“Millennials, more than any other generation, will be self-funding their retirement,” said Catherine Collinson, the center’s president.
Recent federal projections on Social Security suggest the trust fund will be depleted by 2033.
Social Security money will still be available, though. Workers in 2033 will still pay for the program, but only enough to cover about 77 percent of benefits.
Tyler Burmeister, adviser to the University of Minnesota Stock Trader’s Club, graduated with a finance degree in May and said college students could take advantage of higher-risk, higher-reward investments, like stocks, while they’re young.
“I just assume [Social Security] is not going to be there and make sure I save enough for the situation [where] it’s not,” Burmeister said. “If it is still there when I retire, that’s just a bonus.”
A survey by Own Your Future, an initiative by the Minnesota Department of Human Services that provides advice on how to prepare for retirement, found that Minnesotans who were 44 years old and under — the study’s lowest age bracket — were highly concerned about running out of retirement money.
As the age of respondents increased, that concern was replaced with a worry about a need for long-term health care, the survey found.
Adding to those concerns, growing amounts of student debt make some students doubt their ability to save money for retirement.
Biology and finance sophomore Sachin Rao said he invests in stocks with his father and brother, but he said he needs to research other options for the future.
He plans on going to medical school and said he is concerned about loans impeding him from saving for retirement.
“Student debt just compounds on itself, and when you’re paying that constantly, you can’t really justify saving,” Rao said.
Burmeister suggested students pay off loans with interest rates higher than 7 percent before they start to save for retirement.
Alongside increasing student debt and decreasing Social Security funds, Collinson said today’s college graduates face other challenges. They are more likely to switch employers and careers than past generations, which is a trend that adds potential complications when transferring retirement funds between companies or employment sectors.
The combination of these factors has left some students pessimistic.
“Student loans have been an incredible burden on our generation, [and] Social Security has become unsupportable,” political science and history sophomore Amanda Kruger said. “I doubt that we’ll be able to have much of a retirement that we can count on from outside our own income.”
