Social Security is one of America’s great successes. The program provides a foundation of economic security for more than 47 million Americans and their families. Because of Social Security’s built-in protections, we have come close to eliminating poverty among seniors. Social Security also provides basic income to millions of families who have suffered the death or disability of a wage earner.
Social Security is financially strong. In 2003, Social Security took in $161 billion more than it paid out in benefits. The program has the resources to provide benefits for the baby boomers and their children and grandchildren. The Social Security Trustees predict that Social Security will pay ever-increasing benefits through at least 2042, when surviving baby boomers will be mostly in their 80s and 90s. If the United States economy’s long-term growth rate falls to half the level of the past 50 years, the Trust Fund may be depleted after 2042, but Social Security payroll taxes alone would still cover benefits worth an estimated $1,100 more after inflation than today’s seniors receive. Using less pessimistic economic assumptions, the Trustees’ low-cost long-term forecast predicts that Social Security will continue to provide each generation of retirees with more generous benefits than their predecessors through the entire 21st century.
If Social Security finances are really in good shape, why have so many politicians, policy analysts, and reporters warned us that something must be done to “save” Social Security? How have so many Americans become convinced that Social Security won’t be there for them?
Misconceptions about Social Security are widespread because predictions about the distant future based on multiple assumptions are reported as “facts,” frequently distorted, and almost always considered out of context. In addition, some organizations and individuals committed to privatizing Social Security are driven by ideology or hope of profiting from the billions of dollars in investment fees that a privatized system could generate. The majority of Americans would be worse off financially under a privatized system, all would be far less secure, and creating a new system would cost trillions of new tax dollars. Therefore, undermining faith in the existing Social Security program has been a major strategy privatizers have used to promote their agenda.
This report provides background information on how Social Security works, explains how it is that Americans can easily afford Social Security in the long run even as our population ages, and points out fundamental problems with proposals to privatize the program. Finally, it recommends ways we should improve Social Security to serve Americans even better.
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