Testimony Before the Subcommittee on 

Social Security, Committee on Ways and 

Means, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery 

Expected at 2:00 p.m. EDT 

Tuesday, May 17, 2005 SOCIAL SECURITY

Societal Changes Add 

Challenges to Program 

Protections 

Statement of Barbara D. Bovbjerg, Director, 

Education, Workforce, and Income Security 

GAO-05-706T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-706T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Barbara D. 

Bovbjerg at (202) 512-7215 or 

bovbjergb@gao.gov. 

Highlights of GAO-05-706T, a testimony 

before the Subcommittee on Social 

Security, Committee on Ways and Means, 

House of Representatives 

May 17, 2005

SOCIAL SECURITY

Societal Changes Add Challenges to 

Program Protections 

The Social Security program today continues to provide protection from 

poverty in old age just as it was designed to do 70 years ago. Social Security 

protects workers through a benefit formula that advantages low-wage 

workers, benefits for the disabled, spousal and survivor benefits, and a 

monthly annuity and yearly cost of living adjustment. At the same time, 

much in American society has changed greatly since the inception of the 

Social Security program. People are living longer, women’s labor force 

participation has increased significantly and household composition has 

changed dramatically. In addition, labor force growth has slowed 

significantly, and the nature of work has changed in ways that affect 

workers’ ability to save for retirement. These changes suggest that the Social 

Security system as it is currently designed may not be as effective as it could 

be in addressing the needs of our society. Some of the areas where changes 

in design could bring the program more in alignment with the current 

structures of work and families include encouraging older workers to remain 

in the labor force, addressing questions about the equity of spousal benefits, 

and redesigning the Disability Insurance program. 

Given its long-term solvency problems, however, there are difficult decisions 

to be made about Social Security, largely because the program is so 

important to so many. In addition, the more immediate financial problems of 

the Medicare program also require attention. Policymakers will need to 

address the escalating costs of both Social Security and Medicare while 

recognizing that these programs are crucial to retirement wellbeing. Most 

importantly, the solvency and sustainability of Social Security should be 

addressed within the context of the program’s role of protecting vulnerable 

populations, while at the same time considering how carrying out that role 

may need to change to better address changing societal needs. 

Poverty Rates for Elderly Have Declined Faster than for Other Groups 

0

5

10

15

20

25

30

35

40

1959

1964

1969

1974

1979

1984

1989

1994

1999

2004

Adults 65+

Children < 18

Adults 18-64

Percent of population below poverty

Source: U.S. Bureau of the Census. 

Note: Data for years indicated by dashed lines were not available but are available for 1959. 

Before Social Security was enacted 

in 1935, at least half of those 65 and 

older in the United States were 

financially dependent upon others, 

including family members and 

public assistance. Today, the 

elderly’s dependency on public 

assistance has dropped to a 

fraction of its depression-era levels, 

and poverty rates among this group 

are now lower than for the 

population as a whole. However, 

Social Security’s long-term 

financing problems will require 

changes to restore fiscal stability to 

the program. The challenge for 

policymakers will be to make the 

necessary changes while retaining 

protections that are so important to 

millions of Americans. 

The Chairman of the Subcommittee on Social Security of the 

House Committee on Ways and 

Means asked GAO to discuss the 

importance of Social Security for 

vulnerable populations. This 

testimony will address the key 

provisions in the Social Security 

program that support vulnerable 

populations, the ways in which 

those populations and American 

society in general have changed 

over time, and the implications of 

those changes for the Social 

Security program. 
Page 1 GAO-05-706T 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss how the Social Security program 

protects vulnerable populations and how the program may need to evolve 

to meet their changing needs. Before Social Security was enacted in 1935, 

at least half of those 65 and older in the United States were financially 

dependent upon others, including family members and public assistance.1

Today, the elderly’s dependency on public assistance has dropped to a 

fraction of its Depression-era levels, and poverty rates among this group 

are now lower than for the population as a whole. At the same time, Social 

Security has become the single largest source of retirement income for 

Americans, supporting over 90 percent of those 65 and older. Moreover, it 

is the only source of income for approximately 22 percent of the elderly 

population. However, Social Security’s long-term financing problems will 

require changes to restore fiscal stability to the program. The challenge for 

policymakers will be to make the necessary changes while retaining 

protections that are so important to millions of Americans. 

Today, I would like to talk about the key provisions in the Social Security 

program that support vulnerable populations, the ways in which those 

populations and American society in general have changed over time, and 

the implications of those changes for the Social Security program. GAO 

has conducted several studies related to Social Security reform and its 

impact on vulnerable populations;2

 my statement is largely based on that 

work. 

In summary, the Social Security program today continues to provide 

protection from poverty in old age just as it was designed to do 70 years 

ago. Social Security protects workers through a benefit formula that 

advantages low-wage workers, benefits for the disabled, spousal and 

survivor benefits, and a monthly annuity and yearly cost of living 

adjustment. At the same time, much in American society has changed 

 1

 S. Rep. No. 74-628 at 4 (1935). 

2

 See Social Security and Minorities: Earnings, Disability Incidence, and Mortality Are 

Key Factors That Influence Taxes Paid and Benefits Received, GAO-03-387 (Washington, 

DC: April 23, 2003); Social Security: Program’s Role in Helping Ensure Income Adequacy, 

GAO-02-62 (Washington, DC: Nov. 30, 2001); Social Security Reform: Potential Effects on 

SSA’s Disability Programs and Beneficiaries, GAO-01-35 (Washington, DC: Jan. 24, 2001); 

Social Security Reform: Implications of Raising the Retirement Age, GAO/HEHS-99-112

(Washington, DC: Aug. 27, 1999); Social Security Reform: Implications for Women’s 

Retirement Income, GAO/HEHS-98-42, (Washington, DC: Dec. 31, 1997). 
Page 2 GAO-05-706T 

greatly since the inception of the Social Security program. People are 

living longer, women’s labor force participation has increased significantly 

and household composition has changed dramatically. In addition, labor 

force growth has slowed significantly, and the nature of work has changed 

in many ways, some of which affect workers’ ability to save for retirement. 

These changes suggest that the Social Security system as it is currently 

designed may not be as effective as it could be in addressing the needs of 

our society. Some of the areas where changes in design could bring the 

program more in alignment with the current structures of work and 

families include encouraging older workers to remain in the labor force, 

addressing questions about the equity of spousal benefits, and redesigning 

the Disability Insurance program. At the same time, as policymakers 

consider changes that will restore financial solvency and modernize the 

program, it will be important for them to keep in mind Social Security’s 

role in protecting vulnerable populations. 

Title II of the Social Security Act, as amended, establishes the Old-Age, 

Survivors, and Disability Insurance program, which is generally known as 

Social Security. The program provides cash benefits to retired and 

disabled workers and their dependents and survivors. The Congress 

designed Social Security benefits, at least implicitly, with a focus on 

replacing lost wages.3

 Because the program is financed on a modified payas-you-go basis, payroll tax contributions of those currently working are 

transferred to current beneficiaries. Current beneficiaries include insured 

workers who are eligible for retirement or who cannot work due to 

disability, these workers’ dependents, and certain survivors of deceased 

insured workers. Workers become eligible when they have enough years 

of earnings covered under Social Security (i.e., earnings from which Social 

Security taxes are deducted); they and their employers pay payroll taxes 

on those covered earnings to finance benefits. In 2004, more than 156 

million people had earnings covered by Social Security. 

Social Security was originally an old-age retirement program. However, 

the Social Security Amendments of 1939 added two new categories of 

benefits: dependent benefits paid to the spouse and minor children of a 

retired worker, and survivor benefits paid to the family after the death of a 

covered worker. The Amendments transformed Social Security from a 

 3

 The original formula, as well as subsequent modifications, computed benefits as a 

percentage of wages covered under the program in a way that favors low-wage earners. 

Background 
Page 3 GAO-05-706T 

retirement program for workers into a family-based economic security 

program. The amount of Old-Age and Survivors Insurance (OASI) benefits 

paid in 2004 totaled $415 billion for about 40 million recipients. 

Similarly, the Social Security Disability Insurance (DI) program was 

established in 1956 to provide monthly payments to eligible workers with 

disabilities who are under the normal retirement age, and to their 

dependents.4

 To be eligible for DI benefits as an adult, a person must have 

a certain number of recent quarters of covered earnings5

 and must be 

unable to perform any substantial gainful activity by reason of a medically 

determinable physical or mental impairment. The impairment must be 

expected to result in death or last or be expected to last for a continuous 

period of at least 12 months.6

 As with retired worker benefits, disability 

benefits are funded by payroll taxes paid by covered employees and their 

employers. In calendar year 2004, about 8 million individuals received 

approximately $78 billion in DI benefits.7

Outside Social Security, but integrated with the program, other legislation 

has also addressed income adequacy in various ways. In 1965, Medicare 

and Medicaid were created to alleviate the historically increasing strain 

that health care placed on incomes. In 1972, Title XVI’s Supplemental 

Security Income (SSI) replaced Title I’s Old-Age Assistance. This meanstested program provides cash to meet basic needs for food, clothing, and 

shelter. It is the nation’s largest cash assistance program for the poor, and 

although it is administered by the Social Security Administration, it is 

funded by general tax revenues and not the Social Security trust fund.8

 4

 In 1956, the Social Security Act was amended to provide benefits to disabled workers 

aged 50-64 and disabled adult children. Over the next 4 years, Congress broadened the 

scope of the program, permitting disabled workers under age 50 and their dependents to 

qualify for benefits, and eventually disabled workers at any age could qualify. 

5

 The eligibility requirements for DI are different from the requirements for OASI. 

6

 Work activity is generally considered substantial and gainful if the person’s earnings 

exceed a particular level established by statute and regulations. 

7

 These numbers do not include adult disabled children who are dependents of deceased or 

retired workers, disabled widows and widowers, or disabled parents, who receive their 

disability benefits from the OASI program. About $6 billion were paid out of the OASI trust 

fund to these beneficiaries. 

8

 States have the option of supplementing their residents’ SSI payments. This statesupplemented SSI payment may be administered by the state, or states may choose to have 

the additional payments administered by the federal government. 
Page 4 GAO-05-706T 

Over the years Social Security has contributed to reducing poverty among 

the elderly. (See fig. 1) Since 1959, poverty rates for the elderly have 

dropped by more than two-thirds, from 35 percent to about 10 percent in 

2003. While poverty rates for the elderly in 1959 were higher than for 

children or for working-age adults (aged 18 to 64), in 2003 they were lower 

than for either group. Factors other than Social Security, for example, 

employer-provided pensions, have also contributed to lower poverty for 

the elderly. Still, for about half of today’s elderly, their incomes excluding 

Social Security benefits are below the poverty threshold, the level of 

income needed to maintain a minimal standard of living. Nearly two-thirds 

of the elderly get at least half of their income from Social Security. 

Figure 1: Poverty Rates for Elderly Have Declined Faster than for Other Groups 

Source: U.S. Bureau of the Census 

Notes: Data for years indicated by dashed lines were not available but are available for 1959. 

Currently Social Security faces a long-term structural financing shortfall, 

largely because people are living longer and having fewer children. Social 

Security’s benefit costs will soon start to grow rapidly. According to the 

2005 intermediate—or best-estimate—assumptions of the Social Security 

trustees, Social Security’s annual benefit payments will exceed annual 

revenues beginning in 2017, and it will be necessary to draw on trust fund 

reserves to pay full benefits. And, in 2041 the trust funds will be depleted. 

At that time, annual income will only be sufficient to pay about 74 percent 

of promised benefits. As a result, some combination of benefit and/or 

0

5

10

15

20

25

30

35

40

1959 1964 1969 1974 1979 1984 1989 1994 1999 2004

Adults 65+

Children < 18

Adults 18-64

Percent of population below poverty
Page 5 GAO-05-706T 

revenue changes will be needed to restore the long-term solvency and 

sustainability of the program. 

From its inception, Social Security was intended to help reduce the extent 

of dependency on public assistance programs. Over time, that objective 

has come to be stated more broadly as helping ensure adequate incomes. 

Several key provisions of the program have helped to protect the most 

vulnerable individuals: the progressive benefit formula that advantages 

low-wage workers, disability insurance benefits, survivor and dependent 

benefits, and the fact that the benefit comes in the form of an annuity, with 

an annual cost-of-living adjustment (COLA). 

Social Security’s benefit formula is designed to be progressive; that is, it 

provides disproportionately larger benefits, as a percentage of earnings, to 

low-wage earners than to high-wage earners.9

 By replacing a larger 

percentage of low-wage workers’ pre-retirement income in this way, the 

Social Security benefit helps ensure adequate retirement incomes for these 

workers. The progressive nature of the Social Security system remains 

even after taking account of the fact that contributions to the system come 

in the form of a regressive payroll tax. 

From its origin in 1956, the purpose of the DI program has been to provide 

compensation for the reduced earnings of individuals who, having worked 

long enough and recently enough to become insured, have lost their ability 

to work.10 Payroll deductions paid into a trust fund by employers and 

workers fund DI benefits. Thus, DI, while it has important protections for 

vulnerable populations, is designed to provide insurance for all insured 

workers. The purpose of the SSI program, on the other hand, is to provide 

cash assistance to those who are age 65 and older, blind, or disabled and 

who have limited income and resources. It is a means-tested program that 

serves those not insured by Social Security or those whose Social Security 

benefits fall below SSI’s means-test threshold. 

 9 Social Security: Distribution of Benefits and Taxes Relative to Earnings Level, 

GAO-04-747 (Washington, D.C.: Jun. 15, 2004).

10 The DI program was established under title II of the Social Security Act. 

Key Provisions of the 

Social Security 

Program Protect the 

Most Vulnerable 

Populations 

Progressive Benefit 

Formula 

Disability Insurance and 

Supplemental Security 

Income Benefits 
Page 6 GAO-05-706T 

Workers’ earnings may generate Social Security benefits for their spouses 

and dependents as well as themselves. For example, spouses of retired or 

disabled workers may receive benefits based on a percentage of the 

workers’ benefits. Additionally, after the worker has died, their eligible 

dependents receive survivor benefits.11 Because workers do not make any 

additional contributions to receive these auxiliary benefits, workers with 

families receive a higher implicit rate of return than workers without 

families. Benefits are paid to family members of workers under certain 

circumstances. Spouses and divorced spouses of eligible workers may also 

be eligible at age 62 but can be eligible at younger ages if they are disabled, 

widowed, or caring for eligible children. An eligible worker’s children 

under 18 are eligible for survivors’ benefits, and adult children are eligible 

if they became disabled before age 22. Dependent parents and 

grandchildren of eligible workers are also eligible for survivors’ benefits 

under certain circumstances. 

Social Security benefits are paid out in the form of an annuity. Annuities 

are monthly payments for a specific period time, for example, the lifetime 

of a retired worker.12 Benefits are also increased each year to keep pace 

with increases in the cost-of-living (inflation). The COLA is based on the 

Consumer Price Index. This automatic adjustment was not always a 

feature of the program. It was introduced in the 1970s, as part of a broader 

set of reforms, in order to ensure that benefits did not erode over time. 

Much in American society has changed greatly since the inception of the 

Social Security program. People are living longer, women’s labor force 

participation has increased significantly and household composition has 

changed dramatically. In addition labor force growth has slowed 

significantly, and the nature of work and workers’ benefits has changed in 

many ways, some of which affect workers’ ability to save for retirement. 

 11 Some workers qualify for Social Security benefits from both their own work and their 

spouses’. Such workers are called dually entitled spouses. Such workers do not receive 

both the benefits earned as a worker and the full spousal benefit; rather the worker 

receives the higher amount of the two. 

12 Social Security benefits are not paid for the lifetime of all beneficiaries depending on 

various eligibility requirements, for example, for surviving parents of young children. 

Spousal and Survivors’ 

Benefits 

Annuitization and Cost of 

Living Adjustment 

Changes in the 

Workforce and the 

Nature of Work 
Page 7 GAO-05-706T 

Life expectancy has increased continually since the 1930s, and further 

increases are expected. The average life expectancy for men who reach 

age 65 has increased from 12 years in the 1940s to 16 years in 2005, and is 

projected to increase to 17 years by 2020. Women have experienced a 

similar rise—from 14 years in the 1940s to over 19 years in 2005. Life 

expectancy for women who reach age 65 is projected to be 20 years by 

2020. (See fig. 2) 

Figure 2: Life Expectancy at Age 65 Has Increased 

Note: Life expectancy numbers are based on period tables. 

The aged population is growing dramatically, as a result of increased life 

expectancy and the aging of the baby boom generation. For example, 

individuals aged 65 and over are currently 12 percent of the population. In 

30 years, they will be more than 20 percent of the population. 

Life expectancy 

Life expectancy at age 65, in years

Source: Felicitie C. Bell and Michael L. Miller, “Life Tables for the United States Social Security Area 1900-2100,” Actuarial Study

No. 116, http://www.ssa.gov/OACT/NOTES/as116/as116TOC.html. 

Men

Women

0

10

12

14

16

18

20

22

1940 1950 1960 1970 1980 1990 2000 2010 2020
Page 8 GAO-05-706T 

Social Security was designed around a working father, a stay-at-home 

mother, and children. Society has moved away from this model. There are 

many more single parent and two-earner households than in the past. 

Women’s labor force participation rates are now at 59 percent —a 

substantial increase from their participation rates when the program was 

introduced.13 At the same time, women have different work patterns from 

men. Women are more likely to work part-time and work intermittently as 

they may take time out of the labor force to raise children or care for 

elderly parents. 

Increasing life expectancy, coupled with lower fertility rates, means that 

labor force growth will begin to slow by 2010. By 2025 it is expected to be 

less than a fifth of what it is today. (See fig. 3) Relatively fewer U.S. 

workers will be available to produce the goods and services that all will 

consume. Without a major increase in productivity or immigration, low 

labor force growth will lead to slower growth in the economy and to 

slower growth of federal revenues. This in turn will only increase the 

overall pressure on the federal budget. 

 13 In 1961, women’s labor force participation rate was 38 percent, compared to 83 percent 

for men. 

Changing Composition of 

Households and Increased 

Labor Force Participation 

of Women 

Slow Labor Force Growth 
Page 9 GAO-05-706T 

Figure 3: Labor Force Growth Is Expected to Slow Significantly 

Source: GAO analysis of data from the Office of the Chief Actuary, SSA. 

Note: Percentage change is calculated as a centered 5-yr moving average of projections based on the 

intermediate assumptions of the 2005 Trustees Reports. 

This slowing labor force growth, as well as the increases in life 

expectancy, has important implications for the solvency of the Social 

Security system. Fewer workers will be contributing to Social Security for 

each aged, disabled, dependent, or surviving beneficiary. 

In recent decades the national economy has moved away from 

manufacturing-based jobs to service- and knowledge-based employment. 

Another change in the nature of work is employers’ increasing use of 

temporary and contingent workers. Contingent workers are less likely 

than the rest of the workforce to receive health insurance and pension 

benefits through their employers. Many of these workers either are not 

offered benefits by their employers or do not qualify for benefits because 

they do not work enough hours or have not worked for their employers 

long enough. Furthermore, when their employers offer health insurance 

and pension plans, many contingent workers do not participate because of 

the cost of the plans. The mobility of these workers also has an impact on 

their ability to save for retirement, since they may not stay with one 

employer long enough to qualify for a pension. 

Change in the Nature of 

Work 

0

1

2

3

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080

Percentage change (5-yr moving average)
Page 10 GAO-05-706T 

Currently, only about 50 percent of workers have an employer-sponsored 

pension plan to supplement their Social Security benefit. For those 

workers who do have pensions, however, the structure of those plans has 

changed over time. More and more employers are switching from defined 

benefit (DB) to defined contribution (DC) plans. In doing so they are 

shifting an increasing share of the responsibility for providing for one’s 

retirement from the employer to the employee. DC plans have lower 

participation rates than DB plans because many DC plans require the 

employee to opt for coverage, whereas most DB plans enroll participants 

automatically. Additionally, increasing costs of other benefits, such as 

health care, are making employers less willing or able to increase other 

forms of compensation packages, including pensions. As a result, 

employer-sponsored pensions may provide workers a smaller share of 

retirement income than they have in the past. 

Regardless of all these changes, and in some cases, because of them, many 

workers still rely heavily on Social Security for their retirement. At the 

same time, changes in household structure, labor force participation, and 

life expectancy all suggest that the system as it is currently designed is not 

as effective as it could be in addressing the needs of our society. There are 

several areas where changes in design could bring the program more in 

alignment with the current structures of work and family. 

As a consequence of increases in life expectancy, individuals are generally 

spending more years in retirement. The average male worker spent 

18 years in retirement in 2003, up from less than 12 years in 1950. 

Encouraging older workers to remain in the labor force could increase 

revenues to Social Security and significantly improve individuals’ standard 

of living in retirement. Although some workers may face significant health 

problems, there is evidence that the health of older persons generally is 

improving. Research has shown that the majority of workers aged 62 to 67 

do not appear to have health limitations that would prevent them from 

extending their careers, although some could face severe challenges in 

attempting to remain in the workforce.14 In general, however, today’s older 

population may have an increased capacity to work compared with that of 

 14 GAO/HEHS-99-112. 

Re-structuring of 

Employer-Sponsored 

Pension Plans 

Changing Needs of 

Society Has 

Implications for 

Social Security 

Working Longer 
Page 11 GAO-05-706T 

previous generations.15 Congress has already provided an incentive for 

older workers to continue working by repealing the earnings test for 

individuals at or above the full retirement age. This change allows older 

workers to continue working without any reduction in their Social 

Security benefits. It will be important to have institutions in place that can 

further facilitate the continued employment of older workers. 

As women’s participation in the labor force has increased, more of them 

may be entitled to Social Security benefits based on their own earnings 

records rather than their spouses’. As a result, there will probably be 

relatively more two-earner couples and relatively fewer one-earner 

couples in the system. Under the current program, non-working spouses 

can receive a spousal benefit even though they had no covered earnings of 

their own. Spouses can be entitled to a benefit based on their own 

earnings record that is equal to or less than the benefit they are entitled to 

on their spouses’ earnings records. The household benefit in such cases is 

no greater than if such spouses had never worked at all. Similarly, when a 

woman becomes widowed, her total household income can potentially be 

cut much more deeply if she was receiving a retirement benefit based on 

her own earnings while her spouse was alive, compared to a widow whose 

benefit was based only on her spouse’s earnings. Thus two-earner couples 

may question whether they are receiving an adequate return on their 

contributions. In considering alternatives to the one-earner model on 

which the program was created, however, a two-earner model is not 

necessarily the answer. In a country as heterogeneous as America, 

probably no one model is optimal. The increase in women in the 

workforce and two-earner couples raises questions about the equity for 

working women of the current design of the spousal benefit. 

The DI program is based on the concept of assisting individuals whose 

impairments have adversely affected their work capabilities. The program 

provides compensation for reduced earnings due to a disability and 

attempts to facilitate the efforts of individuals with disabilities to return to 

work. However, GAO’s work on federal disability programs,16 including DI, 

has found that these programs are neither well aligned with 21st Century 

 15 It should be noted, however, that life expectancy is related to income, and low-income 

workers tend to have lower life expectancies and poorer health outcomes. 

16 High-Risk Series: An Update, GAO-05-207 (Washington, DC: Jan. 2005). 

Spousal Benefits 

Federal Disability 

Programs 
Page 12 GAO-05-706T 

realities nor are they positioned to provide meaningful and timely support 

for Americans with disabilities. Our work suggests that these programs 

remain grounded in outmoded concepts of disability, and are not updated 

to reflect scientific, medical, technological and labor market 

improvements. Moreover, the enactment of various DI work incentives 

that are intended to encourage beneficiaries to work—and, potentially, to 

leave the disability rolls— has had little discernible impact on 

beneficiaries’ success in returning to the workforce. Policymakers will 

need to consider how these realities fit into the evolving role of the DI 

program, particularly as the baby boom generation reaches their disabilityprone years.17

Before the advent of Social Security, being old often meant being poor. 

Today, older Americans’ dependency on public assistance is dramatically 

lower than Depression-era levels, and poverty rates among the elderly are 

now lower than for the population as a whole. At the same time, Social 

Security has become the single largest source of income for the elderly, 

providing retirement income to more than 90 percent of persons aged 65 

and older. 

Given its long-term solvency problems, however, there are difficult 

decisions to be made about Social Security, largely because the program is 

so important to so many people. The challenges posed by the growth in 

Social Security spending become even more significant in combination 

with the more rapid growth expected in Medicare and Medicaid spending 

and the need for reform of the private pension system. Medicare, in 

particular, presents a much greater, and more complex fiscal challenge 

than does Social Security. Policymakers will need to address the 

escalating costs of both Social Security and Medicare while recognizing 

that these programs are crucial to retirement wellbeing, especially for 

vulnerable populations. 

There are tough decisions to be made, and action is needed sooner rather 

than later. Most importantly, however, the solvency and sustainability of 

Social Security should be addressed within the context of the program’s 

role of protecting vulnerable populations, while at the same time 

considering how carrying out that role may need to change to better 

address changing societal needs. We at GAO look forward to continuing to 

 17 The average age of disabled workers is approximately 50. 

Concluding 

Observations 
Page 13 GAO-05-706T 

work with this Committee and the Congress in addressing this and other 

important issues facing our nation. 

Mr. Chairman and Members of the Subcommittee, this concludes my 

prepared statement. I’d be happy to answer any questions you may have. 

For further information regarding this testimony, please contact 

Alicia Puente Cackley, Assistant Director, on (202) 512-7215. 

Gretta L. Goodwin also made key contributions to this testimony. 

GAO Contacts and 

Staff 

Acknowledgments 

(130485) 
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Federal Programs 

Congressional 

Relations 

Public Affairs 

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