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Strengthening and Securing Social Security

Strengthening and Securing Social Security

Social Security Forums in Hawaii

Marie F. Smith
President, AARP
January 2005

In these days of heightened insecurity, the last thing Hawaiians deserve is a threat to their own future financial security – and a threat to one of the most successful programs in U.S. history.

Yet as we stand here today, Social Security stands in the line of fire. There is a lot of misinformation being shot out of Washington. The first thing we need to know is that – despite everything we may have heard – Social Security today is strong. That's right! The program is not in crisis. It's not going broke. The trust fund will be large enough to pay 100 percent of promised benefits through 2042 – when the youngest of the baby boomers will be 78 years of age!

After 2042, if no changes are made, fully 70 percent of promised benefits could still be paid. So, what we need to do now is to take steps to strengthen Social Security's long-term solvency to ensure that full benefits can be paid beyond 2042. We want to guarantee full Social Security benefits for all future generations. 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. AARP is firmly opposed to private accounts that divert money from Social Security payroll obligations. Such private accounts won't help Social Security's long-term financial Security and they won't help the future retirement security of today's younger workers.

Why? Because benefits to current beneficiaries still must be paid, even though there would be less revenue due to the diversion of payroll taxes into private accounts. So, extensive national borrowing would be required to meet these obligations, resulting in higher interest rates and additional interest payments. On top of that, the borrowing to fund an extended transition period would equal as much as $2 trillion over 10 years. At a time when deficit figures are already at record numbers, it makes no sense.

And let's not forget – private accounts can lose money just as fast as they can make it. Those of us who've watched the stock market in the last few years know that "what goes up can certainly come down." What if you needed to retire when the market was down and your private account was down with it? Do we really want to take that gamble?

Social Security is the only guaranteed, inflation-proof, lifelong benefit that millions of workers – present and future – can count on. We should not be talking about replacing this rock solid guarantee with a risky gamble.

AARP believes there are better ways to ensure Social Security's long-term solvency and we will wage the fight of our lives to ensure that the only guaranteed source of retirement security for America's families is not put at risk needlessly.

This is – first and foremost – a question of values. Prior to the creation of Social Security in 1935, older Americans were our poorest and the most neglected population. President Franklin Roosevelt – along with millions of others – believed that this was not worthy of our great nation. They declared that those who fought our wars and gave a lifetime of service to their families and communities should not have to face poverty in old age. And so they made a promise to working Americans and retirees.

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