The Social Security Trustees released their annual report today reiterating that Social Security, if not reformed, is on the road to financial ruin. This report comes less than a month after Federal Reserve Chairman Alan Greenspan made similar predictions.
“Social Security will begin running a deficit in just 15 years,” said Carrie Lukas, director of policy at the Independent Women’s Forum. “Congress should take action now to put Social Security on a sustainable course.”
The Social Security Trustees Report found that Social Security’s current unfunded liability — the amount of benefits promised that aren’t covered by future tax receipts — is 4.7 trillion dollars. The Trustees also found that because of the shortfall in financing, under current law, Social Security will only be able to pay 73 percent of benefits in 2042, when today’s 25 year olds are getting ready to retire.
“For women, timely Social Security reform is particularly critical,” said Lukas. “Women live longer than men and are more likely to depend on Social Security at retirement. Women need a Social Security system that is financially sound — Congress should reform Social Security to allow individuals to put a portion of their payroll taxes in a savings account, which would help pay their future benefits.”
“This reform would enable individuals to invest in real assets, such as stocks and bonds,” continued Lukas, “Women are less likely than men to participate in other retirement savings vehicles so providing the opportunity to accumulate savings through Social Security would be particularly important for women.”
In 2001, the President’s Commission on Social Security offered three proposals that would create a system of personal accounts within Social Security. Feminist groups such as the National Organization for Women (NOW) and the Institute for Women’s Policy Research opposed those personal account plans, but failed to offer their own alternative version of shoring up Social Security’s finances. “These groups are disserving women by avoiding this issue,” said Lukas, “Women deserve honest answers about how to address Social Security’s problems.”