More Young People May Enjoy Secure Retirements

NEW YORK ( TheStreet) -- According to a variety of polls, many young people are glum about their retirement prospects. The pessimists fear their savings will be inadequate to cover living costs. Some members of the younger generation worry that Social Security will disappear.

In fact, the outlook may not be so bleak. In recent years, more people have begun saving. After facing pressure during the financial crisis, the Social Security program has rebounded and remains on solid footing.

The improvement in savings patterns is particularly noteworthy. According to a survey by TD Ameritrade, young people are proving to be better savers than their parents. While 46% of people aged 48 to 66 have regular savings plans, the figure is nearly 60% for those aged 23 to 47.

The gap can be traced to the different experiences of the generations. Many of the older group graduated high school in the 1960s, a time when jobs were plentiful and many workers could anticipate steady retirement income from traditional pensions. During that era, the need to save may have seemed less urgent. In contrast, young people who came of age in the past decade faced high unemployment rates and dwindling pensions.

"These days the media is saturated with news about economic concerns," says Carrie Braxdale, managing director of investor services for TD Ameritrade. "Young people are listening to the news and taking action."

The increased savings rate could be partly connected to fears about Social Security. According to the TD Ameritrade survey, a significant number of young people figure that Social Security will be diminished or gone soon. About 60% of the older generation agree, saying that young people will not be able to count on full Social Security benefits. But these concerns are unfounded.

According to the 2012 report of the Social Security Trustees, the program faced stresses during the financial crisis and emerged in sound shape. During the recession, tax collection slipped and more people claimed Social Security at younger ages. All that took a toll.

In 2008, the actuaries projected the main Social Security trust fund would not be exhausted until 2042. By this year, the day of reckoning had advanced to 2035.

The deteriorating outlook may sound ominous, but the picture is brightening as tax revenues rebound and fewer people are applying for early benefits. As the economy recovers, the slide in the trust fund is being reversed. Congress still has plenty of time to avoid shortfalls that could occur decades down the road.

"Social Security has been around for 77 years," says Virginia Reno, vice president of the National Academy of Social Insurance, a nonpartisan think tank. "Policy makers have always dealt with funding problems in the past, and it is inconceivable that they will allow benefits to drop abruptly."