Douglas Holbrook, Vice President - Secretary/Treasurer
AARP Board of Directors
Good morning, my name is Doug Holbrook, and I would like to thank Senator Dorgan for inviting AARP to testify at this hearing. Social Security is crucial to the economic security of more than 47 million Americans, and making certain that it is strong for future generations is a top priority of AARP.
In this age of heightened insecurity, the last thing the American people deserve is a threat to their own future financial security – and a threat to one of the most successful federal government programs in U.S. history.
Yet as we stand here today, Social Security stands in the line of fire. Steps must be taken to strengthen Social Security for the future. But there is a right way and a wrong way.
The wrong way is to take some of the hard-earned money workers pay into Social Security and divert it into private accounts.
Diverting money into private accounts would weaken Social Security, put benefits for future retirees at risk, and do nothing to ensure long-term solvency. Private accounts are NOT a way to strengthen Social Security.
Further, the transition to a private account system would cost trillions of dollars. That would add to the federal deficit and increase the federal debt. That is not the legacy we want to leave to our children and grandchildren.
AARP believes there is a better way to strengthen Social Security. We are firmly committed to ensuring that the only guaranteed source of retirement security for America's families is not put at risk.
Social Security is the only guaranteed, inflation-proof, lifelong benefit that millions of workers – present and future – can count on. And we should not be talking about replacing this rock solid core of income security with a risky gamble.
There are four pillars to retirement security and only one that is guaranteed – Social Security. The others pillars are pensions and savings; continued earnings; and health insurance.
But, less than half of working Americans have a pension plan where they work. Personal savings are at an all-time low.
The fact is, two-thirds of Americans age 65 and over get at least half of their income from Social Security. Lower wage workers and minorities depend even more heavily on Social Security for their retirement income. For one-third of beneficiaries, especially older women, Social Security is nearly their entire income – and Social Security is all that stands between them and a life of poverty. And when you consider the trends in private pensions and personal savings, we expect Social Security to be just as important for the boomers when they retire during the next several decades.
We all know that Social Security faces a long-term financial problem. But, by making some reasonable adjustments today we won't have to take drastic action tomorrow.
The first thing we need to make clear is that Social Security is financially strong. The program is not in crisis. We need to remind people that even after 2042 when the trust fund is exhausted, Social Security can pay over 70 percent of current law benefits for decades. Once people understand this fact, they are much more open to options that will strengthen Social Security for the long haul.
However, it is true that the system needs long-term measures to be able to pay full benefits to boomers and future generations.