Uncertainty About Social Security, Taxes, and Health Care Is Bad for Families – and the Economy – Center for Retirement Research
Employees and retirees worry when faced with unexpected policies.
Planning for a secure retirement is a big challenge; The plan must cover all of the person’s remaining years and beyond, taking into account their inheritance. Further complicating such planning are possible changes in the public policy environment: changes in social insurance systems may undermine the foundations of the retirement system; changes in the tax system can affect household finances; and ballooning government debt can raise interest rates and slow the economy.
To be clear, “policy uncertainty” is not about policy change, per se, but rather about uncertainty of future policy. Even without a change in current policy, for example, rigid and polarized elections force households to consider a wider range of policies than if the outcome of the election is certain or the policy positions of the candidates are the same.
The academic literature suggests that the effects of policy uncertainty on the economy are generally negative. In a large economy, uncertainty suppresses economic activity, increases stock market volatility, and reduces returns. Similarly, unemployment tends to rise with greater uncertainty, while consumption and investment tend to fall. It’s also clear that families’ efforts to protect themselves from certain risks, such as cuts in Social Security benefits, can hurt them. Individuals are willing to sacrifice a lot 6 percent of expected earnings to resolve uncertainty about future profit levels.
Against this background, in partnership with Jackson National Life Insurance, we asked Greenwald Research to survey 1,443 near-retirees and retirees ages 45-79 with more than $100,000 in investable assets. The survey examined both how participants perceive the nature and extent of risk related to Social Security, Medicare, and fiscal policy, and what they can do to prevent the risk.
The study took place between July 7 and July 31, 2025, a period that now seems almost quiet compared to Iran’s bombing. But as of early 2025, policy had changed in dramatic ways around taxes — especially tariffs, the federal debt, and Medicaid (thanks to the One Big Beautiful Bill). And long-term trends in Medicare and Social Security financing were becoming more concerning. It should therefore come as no surprise that respondents to an investor survey in July 2025 expressed concern about the direction and unpredictability of federal policy (see Figure 1).
Those close to retirement and retirees have also been exposed to many issues of policy uncertainty (see Figure 2). Most reported seeing news about financial pressures on Social Security (55 percent), Medicare costs (52 percent), the size of the federal debt (75 percent), and taxes (89 percent).
Some more complex analyzes show a clear relationship between the individual’s use of media coverage of Social Security, Medicare, and federal taxes/debts, on the one hand, and their concerns about the future, plan for retirement delays, and move to reduce investment risk, on the other. The overall effect is that 21 percent of the non-retired respondents in the sample decided to postpone their retirement. Also, on the financial side, 28 percent of the entire group increased the amount in their emergency fund, and 33 percent switched to fixed investments (see Figure 3).
Overall, the risk that policy uncertainty poses to those close to retirees and those who have retired appears high, imposing significant costs on households as they take precautionary measures, and damaging the economy. As noted, this study was conducted during what appears to have been a relatively quiet period over the past 18 months. Obviously, the revised survey will show more concern and more people planning to take protective measures. These actions have real costs.
