|
| Briefing Book |
| White House Conference |
Social Security Advisory Board400 Virginia Avenue, SW, Suite 625Washington, DC 20024 Tel: (202) 475-7700 Fax: (202) 475-7715 "SOCIAL SECURITY: WHY ACTION SHOULD BE TAKEN SOON" The following statement is an excerpt from a report issued in July 1998 by the bipartisan Social Security Advisory Board, entitled "Social Security: why Action Should Be Taken Soon." "The Nation is engaged in an important discussion about the future of Social Security. There are many views about the kinds of changes that should be made. Whatever one's views, essential facts should be agreed upon. The purpose of this paper is to establish two realities that every citizen needs to take account of (1) the dimensions of the changes that are required if the Social Security system is to maintain solvency beyond 2032, the year the Trust Funds are projected to be exhausted, and (2) the need to make these changes sooner rather than later. "Congress has amended the Social Security law many times since it was enacted in 1935. It has never allowed the program to reach the point where promised benefits could not be paid, and it is unthinkable that it would ever do so in the future. However, delay uses up valuable time, and gives policy makers and the American people fewer and more difficult choices. Prompt action is essential if we are to restore confidence in the future of Social Security and enable today's workers to plan for a secure retirement. "Social Security is a social insurance program to which nearly all workers, along with their employers, are required to contribute in order to provide protection against the risk of loss of wages due to retirement, disability, or death of a worker. Retired workers make up 62 percent of all beneficiaries. But the program's income protection extends beyond retired workers. According to estimates, about 4 out of 10 young men, and 3 out of 10 young women, who are now age 20 will die or become disabled before reaching age 67. Today, 10 percent of all Social Security beneficiaries are workers who are disabled and have not reached retirement age; 11 percent are spouses and children of retired and disabled workers; and 16 percent are spouses and children of deceased workers. Whatever changes are enacted, Social Security must continue to protect these vulnerable individuals. "Some think that Social Security should become more of a retirement savings program. They propose that a portion of a worker's earnings be placed in individual investment accounts, either on a mandatory or a voluntary basis. Others believe that the program should be maintained largely as it is now, and that solvency should be maintained without making structural changes. (See page 21 for a brief description of some of the proposals that have been made to address the long-range solvency problem.) All of the proposed changes require trade- offs. Evaluating the merits will require careful assessment of their impact on the well-being of individuals and of the society at large. "In considering changes to Social Security, it will also be necessary to take into account the Medicare program. Over the next few years, legislative changes will have to be made to Medicare if the Hospital Insurance Trust Fund is to remain solvent beyond 2008, the year it is projected to be exhausted. Because Social Security and Medicare serve many of the same individuals, and both are financed largely from payroll taxes, they share the challenge of paying for benefits for an increasing number of older persons at the same time that growth in the workforce is slowing. It will be important for policy makers to consider the impact that changes in one program may have on their ability to assure the long-range solvency of the other. "Finally, it is important to recognize that Social Security is only one part of our multi-pillar retirement income system. Social Security has always been intended to provide a foundation for retirement income that needs to be supplemented by individual savings and employer pensions. All parts of this system are in need of review since Americans as a whole are not making adequate provision for their retirement. Social Security reform should be meshed with a strengthening of the other parts of the retirement income system, including employer pensions, individual retirement accounts, 401(k) plans, and other saving mechanisms. Considering Social Security reform within this larger context is a vital aspect of the reform process." Social Security Advisory Board
Chair
Members
Staff Director
|
 |
 |
 |
 |
 |