Social Security’s money problems hangs heavily over the future of retirees, leaving many politicians and industry watchdogs to worry if the nation will see a growing number of old, poor people without the resources to pay for even the basics of life.
Statistics paint a picture of millions of senior citizens forced to live in poverty after their working years end. But congressional gridlock prevents any action that would allow Social Security benefits to remain at promised levels despite evidence of broad public support for changes.
Other measures are bleaker. The Organisation for Economic Co-operation looked at retirement benefits among 34 countries. It pegged the U.S. poverty rate for the elderly at just below 20 percent. The OECD defines poverty as earnings of 50 percent of median income for households of a similar size. This method is used as a way to measure the ability to afford the standard elements of a lifestyle in a given society.
Staying above the poverty line is becoming a more difficult proposition as companies have shifted from traditional pension plans with defined benefits to savings plans marked by defined contributions.
“What’s contrary to conventional wisdom is the willingness to pay taxes to improve Social Security,” said Virginia Reno, senior vice president for income security at the academy. “People don’t mind paying for it.”
The survey of 2,000 Americans age 21 and older found that 84 percent said they don’t mind paying for Social Security because it helps millions of people. Wealth had no effect on answers, with more than 80 percent of working Americans and the wealthy saying increased taxes were worth paying to preserve Social Security.
Their bill proposed using “chained CPI” to calculate cost of living adjustments in retirement benefits, something the Harkin bill would forbid. Under a chained Consumer Price Index, Social Security benefits would rise 0.3 percent more slowly than under the current formula. By age 92, monthly payments would be 8.4 percent lower.
Whether either bill makes it to law is a long shot. But, in a snapshot, they offer competing visions on how this country will manage the very real threat of an epidemic of elderly poor.