Manchester, NH — Speaking on a panel on Social Security at the College Convention 2004, IWF policy director Carrie Lukas made the following statement:

I am thrilled to see that college students understand that Social Security is an issue that affects more than just senior citizens: “Social Security affects all Americans.” The reforms made to Social Security will affect not only your quality of life at retirement, but also the job opportunities and paychecks throughout your working life.

Social Security faces significant financial challenges in the coming years. With the baby boomers retiring and life expectancy continuing to climb, the number of seniors drawing Social Security benefits will skyrocket. As a result, workers will have to pay more to support the system or seniors will have to face benefit cuts. Without reform, in forty years, workers will have to pay almost one out of every five dollars they earn to the government just to support Social Security.
Timely reforms can put our Social Security system on a sustainable course. If workers were allowed to put a portion of their payroll taxes into a personal retirement account, they would earn interest and accumulate substantial savings throughout their lives. This would mean that workers could enjoy greater benefits during retirement without forcing the next generation to pay sky-high taxes.

Women will be particularly affected by the fate of our Social Security system. Women live longer than men and disproportionately depend on Social Security for retirement income.  In a system of personal retirement accounts, women would benefit from the returns generated from investing in bonds and mutual funds even if they take time out of the workforce to care for a child. If a woman making $30,000 a year during her first five years out of college were able to put a mere $1,200 — just 30 percent of her payroll taxes — into an account that earns a 4 percent return each year, she would accumulate over $30,000 by retirement, even if she never rejoined the workforce.

This is the power of compound interest, and why it is critical that young people are engaged in creating the Social Security system for the future — a system based on the solid foundation of personal savings and investment.

The Independent Women’s Forum is a nonprofit, nonpartisan organization. It was founded in 1992 to help educate policymakers and the public on issues affecting women.