Tuesday, May 15, 2007

Cutting Social Security Benefits: What's In Your Wallet?

by Barbara B. Kennelly, President/CEO

More than one hundred congressional staffers and reporters joined us yesterday to talk about a wonderful new report prepared by the National Academy of Social Insurance (NASI)on Social Security and the pocketbook realities facing retirees, now and in the future.

I think this report, "Social Security and Retirement Income Adequacy", is incredibly important as the debate over "entitlement reform" moves from conservative think tanks thru the Bush administration to Congressional committees and soon presidential politics. For the past six years, the future of Social Security has been continuously framed as a crisis in the making. Dire macroeconomic projections make great headlines but ignore the dollars and cents truth facing retirees. This NASI analysis correctly shines light on retirement savings, Social Security's role for American seniors and how massive benefit cuts like those proposed by some in Washington could harm millions of current and future retirees, and their families.

Virginia Reno, VP for Income Security with NASI, told the audience yesterday that while private pensions wane and 401K's are still largely being utilized by higher-wage earners, Social Security continues to meet the description of what a successful retirement program should provide. This is from the report's conclusion:

"Social Security has many features of an ideal pension system. It delivers retirement income progressively, effectively, and efficiently. But its replacement rates are modest. To maintain Social Security replacement rates at levels experienced in the past two or three decades would require some increase in benefits. At the same time, steps are needed to bring the Social Security program into financial balance (Reno and Lavery 2005). As private pensions shift from defined benefits to individual savings accounts, a strong defined benefit in Social Security gains added importance. Policymakers who are concerned about securing adequate retirement income in the future – for boomers, their children, and grandchildren – will face choices. They will need to decide how much to build on the strength of the Social Security system, how much to expect from employer-sponsored pension plans, and how much to expect individuals to save for themselves."

Another panelist at yesterday's briefing was Nancy Altman, Social Security expert and author of “The Battle for Social Security: From FDR’s Vision to Bush’s Gamble”. She offered several suggestions to meet Social Security's long range shorftfall that don't involve large benefit cuts or private accounts. Those suggestions are detailed by former SSA Commissioner, Robert Ball, in his proposal "Meeting Social Security's Long-Range Shortfall".

The bottom line is there are more than enough options to preserve and strengthen the monthly benefit. Options which are currently being ignored by this administration's supporters in favor of crisis predictions and dire warnings... all part of a buildup to benefit cuts.

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