Do 71% of America Really Support Means Testing Social Security?

Over the past few days, I've seen headlines claiming that 71% of Americans support means testing Social Security.

The claim comes from a recent Reagan National Economic Forum survey that has been picked up by numerous financial publications and news outlets. The takeaway presented in many of the headlines is simple: Americans want wealthier retirees to receive less in Social Security benefits.

At first glance, that seems like a pretty significant finding.

After all, Social Security has traditionally been viewed as an earned benefit. You pay payroll taxes throughout your working years and receive benefits in retirement. But if these headlines are accurate, it would suggest that a large majority of Americans are now comfortable reducing benefits for affluent retirees.

Before accepting that conclusion, I wanted to look at the actual survey.

What the Reagan Survey Actually Asked

The headline number comes from a question that asked respondents to choose between three options for helping address Social Security's funding challenges:

• Increase their taxes by $1,500

• Cut current retiree benefits by $5,000

• Cut benefits for moderately high-net-worth retirees by $15,000

71% of respondents chose the third option.

The survey notes there was little difference between Democrats, Republicans, and Independents. 

Based on those results, the survey concludes that means testing Social Security has broad bipartisan support.

I'm not so sure that's what the survey proves.

The Problem With "High Net Worth"

My first issue is that the survey never defines what "high net worth" actually means.

Are we talking about billionaires?

Someone with a net worth of $10 million?

A retired executive with multiple homes?

Or are we talking about a retired couple who spent 40 years living below their means, consistently contributing to their retirement accounts, and accumulated $2 million for retirement?

Those are very different people.

The challenge is that everyone seems to have a different definition of wealth. What one person considers rich, another person may consider financially responsible.

Without defining where the line is drawn, it's difficult to know what respondents were actually supporting.

The phrase "high-net-worth retiree" allows each respondent to fill in their own definition.

That matters because the answer might look very different if the survey specified exactly who would be affected.

Did Americans Support Means Testing?

This is where I think many of the headlines overstate the conclusion.

The survey wasn't simply asking:

"Do you support means testing Social Security?"

Instead, it was asking respondents to choose who should bear the burden of fixing Social Security.

Should it be:

• You?

• Current retirees (which were some of the crowd being asked)?

• Someone who has more money than you?

When framed that way, it's not surprising that most people selected the third option.

To me, the survey doesn't necessarily prove that Americans support means testing Social Security.

It shows that when presented with several unpleasant options, most people preferred the option that appeared least likely to affect them directly.

That's a much narrower conclusion than many of the headlines suggest.

The Bandwagon Effect

What concerns me even more is how these survey results are often reported.

Most people won't read the survey.

They won't see the actual question.

They won't notice that "high net worth" was never defined.

Instead, they'll simply see a headline stating that 71% of Americans support means testing Social Security.

Psychologists refer to this as the bandwagon effect.

The bandwagon effect occurs when people begin adopting a position because they believe most other people already support it.

Not because they've studied the issue.

Not because they've thought through the tradeoffs.

But because it appears that the debate has already been settled.

When headlines present a nuanced survey result as broad public consensus, they can influence public opinion rather than simply measure it.

That's why I believe it's important to look beyond the headline and examine the actual question being asked.

Means Testing May Still Be Coming

With all of that said, don't confuse my criticism of the survey with a belief that means testing will never happen.

In fact, I think there's a reasonable chance that some form of means testing eventually becomes part of a broader Social Security reform package.

Not because of this survey.

Not because 71% of Americans supposedly support it.

But because lawmakers are eventually going to have to address Social Security's long-term funding challenges.

When that happens, they're likely to consider a combination of options:

• Tax increases

• Changes to the retirement age

• Benefit adjustments

• Modifications to the benefit formula

• Some form of means testing

The most likely outcome is not one dramatic change.

It's a package of changes.

And if means testing eventually becomes part of that package, I suspect it will be phased in gradually and applied primarily to future retirees rather than those already receiving benefits.

But whether means testing ever becomes reality or not, one thing is certain: Social Security decisions can have a significant impact on your retirement.

In fact, for many affluent retirees, the biggest Social Security mistake isn't future means testing. It's claiming benefits without understanding how different filing strategies affect the rest of their retirement plan.

If you're trying to decide when to claim Social Security, I recently wrote an article called "How Millionaire Retirees Should File for Social Security." It walks through three common filing strategies and explains how to choose the right approach based on your goals rather than guesswork.

You can read it here: How Millionaire Retirees Should File for Social Security

The Means-Testing Question That Matters

The real question isn't whether means testing is possible.

The real question is where policymakers would draw the line.

Who exactly is considered wealthy enough to receive reduced benefits?

Because if that line is ever established, many people who don't consider themselves wealthy today may be surprised to discover that Washington disagrees.

And that's a conversation worth having before we start claiming that everyone agrees on the answer.