Fact Sheet: Strengthening the Social Security System for Future Generations
- Today President Bush discussed the importance of Social Security and the need to fix the Social Security system for future generations of Americans. The President is committed to keeping the promise of Social Security for today's retirees and those nearing retirement and strengthening Social Security for our children and grandchildren.
- Social Security provides a critical foundation of income for retired and disabled workers.
- For one-third of Americans over 65, Social Security benefits constitute 90% of their total income.
- Hispanics, African-Americans, and unmarried elderly women are even more reliant on Social Security.
Doing nothing to fix our Social Security system will cost us, as well as our children and grandchildren, an estimated $10.4 trillion, according to the Social Security Trustees. The longer we wait to take action, the more difficult and expensive the changes will be.
- $10.4 trillion is almost twice the combined wages and salaries of every working American in 2004.
- In 2018, the government will begin to pay out more in Social Security benefits than it takes in in revenue – and shortfalls then will grow larger with each passing year.
- By 2042, when workers in their mid-20s begin to retire, the system will be bankrupt – unless we act now to save it.
- Social Security is sound for today's seniors and for those nearing retirement, but it needs to be fixed for younger workers – our children and grandchildren. In 1950, there were 16 workers to support every one beneficiary of Social Security. Today, there are only 3.3 workers supporting every Social Security beneficiary. By the time our youngest workers – those just entering the workforce today – turn 65, there will only be 2 workers supporting each beneficiary. And, under the current system, today's 30-year-old worker will face a 27% benefit cut when he or she reaches normal retirement age.
- As a result of these demographic changes, the current system will not be able to afford to pay the benefits scheduled for our children and grandchildren without enormous payroll tax increases or huge benefit cuts. The Social Security payroll tax, which was once 2%, is now more than 12%. Economists calculate that under the current system, the payroll tax would have to rise to more than 18% if our children and grandchildren are to receive their scheduled benefits.
- One of the tests of leadership is to confront problems. President Bush came to Washington to solve problems, not pass them on to future Presidents and future generations.
- To ensure its long-term future, Social Security needs to be fixed soon. Any fix will require choices, bipartisanship, and public discussion.
The President's Vision for Social Security
The President will work with Congress to determine the best elements of the proposals that have been put forward, according to these principles:
- President Bush will not change Social Security for today's retirees or near-retirees.
- The President wants to see Social Security permanently strengthened for our children and grandchildren, without raising payroll taxes.
- The President favors voluntary personal accounts as part of a comprehensive solution to give younger workers the option to save some of these payroll taxes. Personal accounts give younger workers the opportunity to receive higher benefits than the current system can afford to pay, and provide ownership, choice, and the opportunity for workers to build a nest egg for their retirement and to pass it on to their spouse or their children.
- Those who do not choose to have a personal account would continue to draw benefits as Americans have long done from the Social Security program.
- Personal accounts will provide Americans who choose to participate with an opportunity to share in the benefits of economic growth by participating in markets through sound investments. Any proposal will include limitations on the risk of investments permitted in personal accounts and will include low-risk, low-cost options like broad index funds similar to those currently available to Federal employees.
Establishing personal accounts does not add to the total costs that Social Security faces. The obligation to pay Social Security benefits is already there. While personal accounts affect the timing of these costs, they do not add to the total amount obligated through Social Security. In fact, every plan scored by the Social Security Administration (SSA) that contains personal accounts would reduce the costs of permanently fixing the system.
George W. Bush, Fact Sheet: Strengthening the Social Security System for Future Generations Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/282062