by Ollie Besteiro
Did you know that Social Security is the only source of income for almost one-third of Texans of retirement age? Or that one in eight Texas residents receives Social Security? Or that the program lifts nearly half of all retirees from poverty?
This month, as our nation celebrates the diamond anniversary of this national treasure-signed into law on August 14, 1935-it’s also time to guard against false assumptions that undermine support for the program and threaten to erode retirement security for our children and grandchildren.
For example, it’s become conventional wisdom for young people to assume that Social Security won’t be around when they need it. Many older folks also question whether Social Security will be able to pay the benefits they have earned.
These doom-and-gloom scenarios are unwarranted and reflect widespread misunderstanding. The Social Security trust fund has about $2.5 trillion in assets, and it’s still growing. That’s enough to cover full benefits for more than 27 years.
If Congress does absolutely nothing, Social Security can pay full benefits until 2037 and 75 percent of benefits for decades after that. That’s not the crisis that alarmists predict, but it’s also something we cannot allow to happen.
Some in Washington are proposing cutting Social Security benefits to reduce the deficit. Of course, we need to get our deficit under control. But rather than raiding the retirement security of future generations, why don’t we start by getting the government to crack down on wasteful, fraudulent, and unnecessary spending, including earmarks and pork-barrel projects?
Social Security has contributed not one penny to our national deficit. The program is self-financed and cannot legally spend more than it collects through payroll taxes, the taxation of benefits, and the assets in the Trust Fund. In fact, for years, Social Security’s surpluses have masked the true size of the deficit in the rest of the federal budget.
It pays to remember what America looked like when Social Security arrived. In the words of President Franklin D. Roosevelt, “one-third of the nation (was) ill-housed, ill-clad, (and) ill-nourished.” The nation’s elderly suffered the most. Nearly half lived in poverty. Those could not work and had no other means of support wound up in poorhouses.
By signing Social Security into law, Roosevelt established what has become the bedrock of economic security for millions of working Americans and their families. In addition to supporting those age 62 and older or disabled, Social Security benefits help all generations. Orphans of the September 11 terrorist attacks, families of soldiers killed in Iraq and Afghanistan, children who have lost a working parent, injured factory workers, widows and widowers – all count on Social Security benefits.
And, yet, as vital as these benefits are, they are modest by any standard. Social Security was never designed to be a worker’s sole source of retirement income. Today, the average workers’ benefits will replace only about $4 out of every $10 earned while on the job. The average retirement benefit in December 2009 was only $1,168 per month – about $14,000 a year. The average benefit for retired women was even less — $983 a month — which comes to under $12,000 a year.
With the political will, we can address Social Security’s long-term shortfall. Changes should strengthen the program for future generations. Changes must be fair, protecting the most vulnerable. Changes must be consistent with Social Security’s character as an earned benefit, providing a measure of economic security through guaranteed life-long, inflation-protected benefits to those who have paid into the system.
We need a national discussion on how to restore retirement security for all Americans. Old-fashioned as it might sound, that dialogue should be civil. It should be bipartisan. It should include strategies to promote more retirement savings in addition to Social Security, such as through incentives to save in the workplace, especially where employers do not offer 401(k) plans.
For Texans, keeping Social Security strong should be something we all can agree on. It is one insurance policy we know is fair, with benefits earned and received by all who pay in.
We all have a stake in getting this right.
Ms. Ollie Besteiro is the President of the Texas AARP
