Resolution

1
Resolution 6 Maintain a strong and solvent
Social Security system

• that continues to meet its obligations for
  current and future beneficiaries, including the
  more than 30 percent who are under age 65 and
  receive disability and/or survivor benefits.

2
Social Security Insurance Basics

• Retirement - insures against poverty in
  retirement
• Survivors - insures dependents when worker dies
  or retires
• Disability - insures against loss of ability to
  work due to disability

3
Retirement insurance protects elderly from
poverty

• About half of people over age 65 have incomes
  that, without Social Security, leave them below
  the poverty line.
• Social Security lifts 13 million elderly people
  out of poverty.

4
Major source of income for most people over age 65

• In 2002, Social Security provided 50 percent or
  more of the income of two-thirds (66 percent) of
  people age 65 or older.
• Social Security provided 90 percent or more of
  the income for one-third (34 percent) of those
  age 65 or older.
• For 22 percent of seniors, Social Security is the
  sole source of retirement income.

5
Disability Insurance

• Disabled workers, their children and spouses
• Disabled adult children
• For young families disability insurance beyond
  what they can afford to buy

6
Survivors Insurance

• Minor children spouses of deceased workers and
  retirees
• Disabled widow(er)s
• Disabled adult children
• For young families life insurance when worker
  dies at young age

7
People with Disabilities

• May receive all three types of Social Security
  benefits
• Family members also eligible
• Disabled adult children often move among
  programs

8
Disability Poverty

• Poverty rates among workers with disabilities
  twice as high as others who get Social Security
• Social Security equals half/more of TOTAL family
  income for about half of disabled worker
  beneficiaries

9
Social Family Insurance

• All workers share risk of common life events
• Each workers record provides benefits for
  different generations of family even young
  workers
• Guaranteed monthly payment

10
Current Design The Positives

• Once eligible, beneficiaries receive set monthly
  payments
• Adjusted yearly for inflation
• Move among three programs work history, age,
  eligibility category
• Same benefit formula all programs

11

• Importance of Social Security for Young Workers
  and Their Families

12
Benefits Available Now

• Disability survivors benefits are guaranteed
  income for worker (disability), spouse and
  children
• Both life events can happen at any time to people
  of all ages

13
Value of Social Security

• For young workers with spouse and two children
• Life insurance policy 403,000
• Disability policy 353,000

14
Younger Workers Disability

• Need fewer credits than older workers to
  qualify
• Must prove significant work limitations
• Amount depends on workers previous earnings
• Benefits for both spouse children

15
Younger Workers Survivors

• Need fewer credits than older workers to
  qualify
• Amount based on workers average lifetime
  earnings
• Benefits based on what worker would have received
  if reach normal retirement age
• Benefits for both spouses children

16
Protects many children from poverty

• Social Security does more to reduce poverty among
  children than any other government program.
• In 2002, one million children under age 18 were
  lifted above the poverty line by Social Security
  benefits.

17

• How Will Individual Private Accounts Affect
  Social Security?

18
The Issue

• Should people be allowed to divert portion of
  taxes from Trust Fund for private accounts?
• Even proponents say private accounts will NOT fix
  programs long term funding

19
Social Security The Facts

• Pays multiple family members beneficiaries
  across generations
• Entitles eligible beneficiaries to guaranteed
  monthly payments
• Calculates benefits based on one workers
  earnings
• Includes automatic cost-of-living-adjustments to
  protect against inflation

20
Private Accounts The Facts

• Increase personal risk
• Reduce guaranteed benefits
• Increase government borrowing
• Increase national debt
• Will not fix Social Securitys long term funding

21
How to fix Social Security

• Some ideas (not an endorsement of any of these)
• Increase payroll taxes
• Raise current retirement age
• Reduce monthly benefits
• Ask Congress for money

22
What lies ahead?

• Each potential change affects Social Securitys
  future
• No immediate crisis
• Possible to meet long term needs with modest
  adjustments over next 20-30 years

23

• A Checklist Effect of Proposed Changes on People
  of All Ages and Their Families

24
Key Principles

• Do not change basic design based on payroll taxes
• Preserve as social insurance for disability,
  survivors and retirement
• Guarantee monthly benefits adjusted for inflation
• Preserve current and future benefits
• Restore programs long term funding

25
Key questions to ask about any proposal

• Does the proposal
• Change the benefit formula? How?
• Change cost-of-living adjustments? How?
• Switch from wage to price index? This will
  reduce benefits.
• Provide benefits for family members as provided
  in current law?
• Raise retirement age?

26
Private Accounts Some key questions when
looking at the impact on people with disabilities

• Who will have access the account? When?
• Will adequate income remain for dependents
  survivors?
• Must people buy private disability insurance?

27
Key points

• Some change is necessary, but nothing drastic
• Protect basic design
• Require beneficiary impact statement for each
  proposal

28
Beneficiary Impact Statement

• Analyze impact for each type of beneficiary
• Retirees/their dependents
• Disabled workers/their dependents
• Survivors of workers, including children under
  age 18 widow(er)s, including disabled
  widow(er)s and disabled adult children
  (dependents of parents who retire, die or become
  disabled)

29

• Eileen P. Sweeney
• Senior Fellow
• Center on Budget and Policy Priorities
• 820 First Street, NE, Suite 510
• Washington, DC 20002
• 202-408-1080
• sweeney_at_cbpp.org