The dramatic decline in individual retirement savings and the disappearance of defined-benefit pension plans are powerful reminders of the importance of Social Security. Social Security remains the country’s single most important family income protection program. According to the National Academy of Social Insurance, Social Security provides:
A typical retiree with the equivalent of a savings account of $225,000.
A young worker and her or his family with a $414,000 disability insurance policy.
The family of a young worker with a life insurance policy worth $433,000.
Social Security Does Not Contribute to the Deficit
The recently constituted “National Commission on Fiscal Responsibility and
Reform,” charged with coming up with proposals to reduce the deficit, has Social
Security in its cross-hairs, even though Social Security has nothing to do with
the long-term deficit. Social Security does
not contribute to the deficit because it cannot pay benefits unless it has
funds to do so.The Social Security trust
fund is a separate segregated account with its own dedicated source funding—employer
and employee payroll tax contributions.The Social Security trust can pay full benefits until 2037.And even if nothing is done, it can pay about
78 percent of full benefits thereafter.
But something should be done.Social Security should and can be
strengthened for future generations with relatively modest adjustments and no
benefit reductions. Furthermore, the bonds in the Social Security trust fund
are as solid as all other U.S. Treasury bonds, which have been rated AAA since
the existence of rating agencies.There
is no precedent and little reason to believe that the United States will default on its
bond obligations.
