Fixing our Social Security system has hardly been discussed this election season and yet it is one of the most pressing problems facing our country.
In just ten years, Social Security will begin running a deficit: the government will collect less in Social Security payroll taxes than it needs to payout in Social Security benefits. At this time, the government will have to use other revenue to pay Social Security’s debts. In total, Social Security’s unfunded liabilities will require trillions of extra dollars. This means if nothing is done, our children and grandchildren will see their taxes soar and will get little from the Social Security system themselves.
Why Social Security matters to women voting in 2006?
Every day without Social Security reform is a missed opportunity for real savings. Right now, a young worker paying Social Security taxes can expect a negative return on her investment. If we reform Social Security to give younger workers the choice to own a personal Social Security account, she can earn a much higher rate of return. This is particularly important for women who tend to work fewer years than men and have less opportunity to take part in other retirement programs.
The problem gets harder to fix with each day that passes. As with any financial problem, it is easier to address immediately than if you wait and let your debts continue to accumulate before taking action. Right now, it is still possible to create a system that allows workers to opt to save a portion of their payroll taxes for their own retirement. It will require an initial investment, but ultimately will create a much more financially stable system. If we wait until Social Security begins running a deficit, it becomes even harder to fix the problem.
What should policymakers do to fix Social Security?
Policymakers need to stop spending the excess Social Security contributions and allow workers to save the excess in their own personal Social Security accounts. Right now, the money that workers pay into Social Security is immediately used to pay existing beneficiaries and the excess “tens of billions of dollars per year–is spent by Congress on other government programs.” This will continue for about another ten years, unless Congress is forced to let workers save that money in their own account. Beyond that, Social Security should be reformed to allow individual workers to invest a portion of the money they currently pay in taxes in personal Social Security accounts. Each account would be administered much like a 40lk and would be used at retirement to pay that worker’s benefits and is fully inheritable.
At a minimum, we need all policymakers to talk about Social Security and agree to look for solution. A nonpartisan, non-profit group called For Our Grandchildren recently challenged policymakers to put all options on the table and to make Social Security reform a priority. Unfortunately, several policymakers refuse to discuss Social Security reform. Voters need to tell them that this is unacceptable.
On October 4, Federal Reserve Chairman Ben Bernanke urged policymaker to act: “Reform of our unsustainable entitlement programs should also be a priority.” Voters should join his call for action.
See IWF Publication “Social InSecurtiy” by Allison Kasic.
For more information about why Social Security reform should be an important issue this election for women, see here or call the Independent Women’s Forum at 202-419-1820.