Americans have achieved many successes with social security. This program provides economic security for over 47 million Americans and their families. We are close to eliminating poverty among seniors because of the built-in protections. It provides basic income to millions who are disabled or have lost a wage earner.
Social security’s financial security is extremely strong. It took in $161 billion more in 2003 than it paid in benefits. These programs are able to provide benefits for baby boomers, their children and grandchildren. It will continue to pay ever-increasing benefits for at least the next few years, when most of the surviving baby boomers will be in their 80s or 90s, according to security trustees. The trust fund could be depleted if the US economy’s long-term growth rate drops to half that of the past 50 year. However, social security payroll taxes would still provide benefits worth $1000 more after inflation than what today’s seniors receive.
The trustees’ low-cost long-term forecast for the future predicts that each generation of retirees will receive more generous benefits than their predecessors throughout the 21st century, based on less pessimistic assumptions. Why are so many reporters, policy analysts, and politicians warning us to save social security? It’s amazing how many Americans have convinced themselves that it won’t be there.
Social security myths are common because projections of the future that are based on multiple assumptions are reported as facts” often distorted and almost always taken out of context. Some individuals and organizations are motivated by ideology to privatize it. They hope to profit from billions of dollars in investment fees that a privatized program could generate.
A privatized system would make the majority of Americans financially less secure. All would be much less secure and it would cost trillions more tax dollars to create a new system. Private organizations have been known to use the strategy of undermining trust in existing programs to advance their agenda.
This report gives background information about social security, explains how Americans can afford it long-term, and highlights fundamental problems with privatizing the program.
It also recommends ways to improve social security in order to better serve Americans. Although we tend to think of it as a retirement plan, 30% of beneficiaries have survivors of disability insurance. Social security survivors insurance benefits the family of deceased workers. This includes children aged 18 or 19 years, disabled children of any age, dependent parents of elderly people, and spouses caring for elderly or disabled children.
The trustees report and the social security trust fund are based on projected income and expenses for social security over 75 years. These projections are dependent on many assumptions regarding birth rates, immigration rates and unemployment. They also require average wages, life expectancy, wage growth, and other factors. Small differences in assumptions can lead to large variations in outcomes over 75 years. Based on different assumptions, the trustees create three different projections. These projections are known as the low-cost, intermediate and high-cost projections.
Intermediate projection of the trustees: The intermediate projection of the trustees predicts that benefits will continue to be outpaced by social security payroll taxes until 2018. Additionally, the combination tax and interest on trust funds will provide benefits until 2028.
With slightly different assumptions, the trustees low-cost projection predicts that the trust funds will never run out and that the program will continue to have the resources to pay all benefits without any adjustments in the tax rate.