# Presentation: 681327

## SOCIAL SECURITY:

- AN INCREDIBLE
- SUCCESS

- What You Need To Know About the Threat of Privatization

## Social Security: An Incredible Success

- "Does Social Security
- have a financing problem?
- Yes.
- Will Social Security
- ever go bust? No."

**David Walker, Comptroller General  of the United States**
- Source: USA Today, January 27, 2005

## Social Security: An Incredible Success

** ****Guaranteed, predictable retirement benefits**

** ****Retirement Benefits for as long as you live**

** ****Annual cost-of-living adjustments**

** ****Low administrative costs**

**Characteristics of Social Security**

** ****Disability and survivor benefits**

## Social Security: An Incredible Success

**Social Security Facts**

-  **One in five adults in the U.S. receive Social Security **
**  ****benefits**

-  **30% of Social Security beneficiaries receive**
**      ****disability or survivor benefits**

-  **Single largest source of retirement income**

-  **Two-thirds of seniors are dependent on Social**
**	****   ****Security benefits for half or more of their income**

## Social Security: An Incredible Success

**Social Security Facts**

-  **48 million people receive Social Security benefits**
**	****  ****every month**

-  **12 million, or one-half, of seniors would be living in**
**	****   ****poverty without Social Security**

-  **In Illinois, 55% of women aged 65 or older would live**
**	****   ****in poverty without Social Security**

## Social Security: An Incredible Success

- = 8.2 million people

-  = 33.1 million people

- = 6.7 million people

**Social Security: Three Types of Protection**

- One Third of All Beneficiaries are Non-Retirees

**SOCIAL SECURITY BENEFICIARIES**
**Source: Social Security Administration, December 2004**

## X

- Privatization IS The Crisis

**Worsens Social Security shortfall**

**Takes $5 trillion from Trust Fund in first 20 years, more in future decades**

** ****Slashes benefits by nearly 50% **

**X**

**X**

**X**

## Social Security: Long Term Challenge, Not A Crisis

**Projected Social Security Shortfall = **
**Cost of Tax Cuts for Wealthy**

**Source: Center on Budget and Policy Priorities**

**$3.0 tril **
**Tax Cuts for Top 1%**

## Social Security Privatization IS The Crisis

- Benefit Cut: Bush Plan

- Source: Social Security Administration, Office of the Chief Actuary, “Estimates of Financial Effects for Three Models Developed by the President’s Commissions to Strengthen Social Security,” January 31, 2002

## Social Security Privatization IS The Crisis

- Monthly Benefit Cuts
- Under Bush Plan

- Source: Office of the Chief Actuary, Social Security Administration, 2001

## Social Security Privatization IS The Crisis

- Monthly Benefit Cuts
- Under Bush Plan

- Source: Office of the Chief Actuary, Social Security Administration, 2001

## Social Security Privatization IS The Crisis

- Monthly Benefit Cuts
- Under Bush Plan

- Source: Office of the Chief Actuary, Social Security Administration, 2001

## Privatization = $152,000 Benefit Cut 

- A 20 year-old today who lives for 20 years after retirement would lose a total of _**$152,000**_ in benefits

- Benefit Cuts
- Under Bush Plan

## Risky Nature of Private Accounts

**Tom**

**Jane**

**Tom and Jane are both employed from age 20-65. Both earn the same wage and receive a 2% raise each year, and both deposit the same amount into their private accounts.  Both experience one year of a Bear market (40% gain) and one year of a Bull market (40% loss). But Jane’s Bear Market is the first year and Tom’s is the last year.  **

|  | TOM | JANE |
| --- | --- | --- |
| Year 1 | +40% |  -40% |
| Year 45 | -40% |                 +40%                                              |
|  |  |  |
|  |  |  |
|  |  |  |

- RETIREMENT: Tom’s pension will be 46% less than Jane’s

- Source: Henry Aaron at Brookings Institute

## X

- Privatization Tax

**X**

**There is a tax on your private account that is paid out of your remaining Social Security Benefits.**

**This tax could amount to 70% or more of the amount of your Private Account.**

**X**

**You don’t get to keep your full guaranteed Social Security benefit **_**AND**_** the private account.**

**X**

**Privatization Tax is **_**on top**_** of the benefit cuts that will affect  all Social Security beneficiaries****  **

**X**

## Risky Nature of Private Accounts

- Future Retirees Would Be
- Better Off If We Did
- Nothing Rather Than
- Privatization

**(Average Annual Benefit for Median Wage Earner Born in 1990s, Retiring at 65)**

## SOCIAL SECURITY: A PROMISE FOR ALL GENERATIONS