Security Be There For You?
Absolutely. The only real question is what kind
of Social Security system we will have. Social Security has been a basic part of American
life for more than 60 years. The Social Security law has been changed over time to meet
the needs of the American people. It will need to change again to meet future challenges.
Today, Social Security provides a minimum
"foundation of protection" for retired workers, and for workers and their
families who face a loss of income due to disability or the death of a family wage earner.
Social Security allows people to live independently and with dignity. About 150 million
workers are protected by Social Security, and more than 44 million people receive
retirement, survivors and disability benefits from Social Security. You and your family
are probably protected by Social Security, and you pay the taxes that help make the system
Social Security payments are based on two
philosophies. First, the system is designed so that there is a link between how much a
worker pays into the system and how much he or she will get in benefits. Basically, high
wage earners get more, low wage earners get less. At the same time, the benefit formula is
weighted in favor of low wage earners, who have fewer resources to save or invest during
their working years. Second, the Social Security program is a way of providing a base of
economic security in today's society. It relieves families of the financial burden of
supporting other family members by providing a valuable package of retirement, disability
and survivors insurance.
Ensuring the future of the Social Security
system is important to you ... to your parents and grandparents ... to your children and
This booklet provides some important facts
about our Social Security system and the issues involved in resolving the system's
Social Security Has Made An Enormous
Difference In The Lives Of Older Americans
Workers can retire as early as age 62 and get
reduced Social Security benefits. Or they can wait until full retirement age and receive
full benefits. The full retirement age is now 65. But, starting in 2003, it will increase
gradually until it reaches 67 for people born in 1960 or later.
More than 9-in-10 retirees now get Social
Security benefit payments each month. Only II percent of American senior citizens live in
poverty; without Social Security, it would be nearly half.
For two-thirds of the elderly, Social Security
is their major source of income. For a third of the elderly, Social Security is virtually
their only income.
Social Security also provides older Americans
with more than a dependable monthly income with automatic increases tied to increases in
the cost of living ... it gives them a measure of deserved financial independence.
Social Security Is More Than
A Retirement Program
Social Security is America's Family Protection
Plan. Younger workers and their families receive valuable disability and survivors
insurance protection. In fact, about 1-in-3 Social Security beneficiaries is not a
About 7.5 million people get monthly survivors
benefits, and more than six million workers and family members get disability benefits.
For the average wage earner with a family, Social Security survivors benefits are
equivalent to a $354,000 life insurance policy ... or a $233,000 disability insurance
Social Security Provides A Foundation
On Which To Build Retirement Security
A comfortable retirement has always rested on a
three-legged financial stool-Social Security, pensions and savings.
Today, only a little more than half of all
workers have employer-sponsored pensions, and people are not saving as much as they know
they should. While Social Security replaces about 40 percent of the average worker's
pre-retirement earnings, most financial advisors say that you'll need 70 percent of
pre-retirement earnings to live comfortably. Even if you can count on a pension, you'll
still need to save. If you won't have a private pension, you'll need to save more-and
Beginning in October 1999, we will begin
mailing a Social Security Statement to workers age 25 and older. This statement will show
your earnings history and also give estimates of retirement, survivors and disability
benefits provided by Social Security. This statement should help you with your future
Changing Demographics Are Driving
The Need For Changes In Social Security
The main reason for Social Security's
long-range financing problem is demographics. We're living longer and healthier lives ...
and this is good news. When the Social Security program was created in 1935, a 65-year-old
had an average life expectancy of 12½ more years; today, it's 17½ years- and rising.
In addition, 76 million baby boomers will begin
retiring in about 2010, and in about 30 years, there will be nearly twice as many older
Americans as there are today. At the same time, the number of workers paying into Social
Security per beneficiary will drop from 3.3 to 2. These changes will strain our retirement
Social Security Is An Economic
Compact Among Generations
Many people think that their Social Security
tax contributions are held in interest-bearing accounts earmarked for their own future
retirement needs. Social Security is actually an intergenerational compactthe Social
Security taxes paid by today's workers and their employers go mostly to fund benefit
payments for today's retirees.
Social Security is now taking in more in taxes
than is paid out in benefits, and the excess funds are credited to Social Security's trust
funds. There is now about $850 billion in the trust funds, and they are projected to grow
to more than $4 trillion in the next 20 years. But benefit payments will begin to exceed
taxes paid in 2014, and the trust funds will be exhausted in 2034. At that time, Social
Security will be able to pay only about three-fourths of benefits owed ... if no changes
Choices Lie Ahead
At the beginning of this decade, the country
faced huge federal budget deficits, making it virtually impossible to address such
long-term challenges as Social Security. Today, however, we not only enjoy a federal
budget surplus for the first time in 30 years, but are projecting federal budget surpluses
for many years to come. We could use these surpluses now, or we could use these surpluses
to prepare for the challenges of an aging America in the coming century. There are a
variety of ways to ensure the long-term stability of Social Security. But each option
involves difficult tradeoffs that need to be discussed.
For example, on the benefit side, some people
propose that the retirement age for full Social Security benefits should be raised
further. They say that Americans are living longer and healthier lives than ever before.
Also, people are spending an increasing number of years in retirement. This strains the
system. Critics say most Americans now choose to retire early, and that it would be hard
for some people to find good jobs or to work beyond the current retirement age because of
their health or the nature of their jobs.
On the revenue side, some people believe that
Social Security taxes should be paid on all income. They say that the current earnings
limit of $72,600 in 1999 allows wealthier Americans to avoid paying Social Security taxes
on some of their income. Critics say that Social Security is supposed to be a foundation
for retirement planning. If wealthier people contributed more to Social Security, they
would have to receive more in benefitsand in some cases much more.
On the investment side, some people support
creating individual savings accounts for all workers to supplement or replace part of
Social Security benefits. They say that workers would have the potential for more money in
retirement than if they rely only on Social Security, and that they could have the freedom
to choose how to invest their savings. Critics say that you can get higher returns on
investments only by taking higher risks. And they say that if the accounts were a
supplement to Social Security, a way to fund them would have to be created. If the
accounts were to replace part of Social Security, a lower level of guaranteed Social
Security benefits would have to be established.
Some people think the government and not
individuals should invest Social Security reserves in the stock market. They say the
government is better able to risk a market downturn than are individual workers. Critics
say that the government could end up owning a sizable share of private companies.
There are many other options and suggestions
If you would like more information on how the
Social Security program works and what benefits you may be entitled to under current law,
call Social Security's toll-free number
1-800-772-1213. If you are deaf or hard of hearing, you may call our toll-free TTY
number-1-800-325-0778. Or you can visit our website at www.ssa.gov.
Social Security Administration
SSA Publication No. 05-10055
Social Security Return