Talking Points About Women, Social Security and Privatization

March 4, 2005

Social Security is Guaranteed Retirement Income—Social Security is a bare-bones retirement benefit, providing about $190,000 to retired women workers throughout their retirement years. This social insurance program is risk-free, with monthly payments absolutely guaranteed unless changed by an act of Congress. Risky private investment accounts would not guarantee benefits.

• Over 60 million women work in jobs covered by Social Security and have 6.2% of their earnings withheld as payroll taxes. An equal amount is contributed to the trust fund by the employer on behalf of the worker.

Social Security Provides Monthly Survival Benefits—Social Security payments make a significant improvement in low-earning retirees' family income. These benefits prevent tens of millions individuals and their families from living in poverty.

• In 2005, the average monthly benefit paid to women as retired workers was nearly $827.40. For a retired married couple, the average is $1,574. For disabled workers, the average monthly benefit is $1,497 and for surviving spouses and children who have lost a working parent, the average monthly benefit is $1,979.

• Almost 30 million women receive Social Security benefits, either as retirees, spouses of retirees, survivors, or disabled workers.

Social Security Provides Valuable Life and Disability Insurance—Social Security includes life and disability insurance as well as retirement benefits. Similar insurance policies would not be affordable to the average worker if purchased in the open market. The value of life insurance provided to survivors of an average deceased worker is over $400,000, and the value of disability protection for a young disabled worker with a spouse and two children is $350,000. A retirement program based on investments in the stock market would not provide life and disability insurance coverage—leaving millions of workers, their spouses and children at serious risk.

Social Security is Important to Women—Social Security makes up 55% of older women's income, compared to just 39% for senior men. For many elderly unmarried women, it is their only source of retirement income! Private accounts and the discriminatory annuities we would be required to purchase would not guarantee the steady source of income so important to elderly women.

• Women are 58% of all Social Security beneficiaries 65 and older, and 71% of all beneficiaries 85 and older.

Social Security is Anti-Poverty Insurance—Without a Social Security check, most seniors would be poor and senior women would suffer the most. Senior men's average annual income in 2002 was $29,385; senior women's average annual income was about half that at $16,124 in 2002. For all senior households, Social Security comprises 39% of their total income, providing an important base for a secure retirement.

• Nearly 7 million elderly women escaped poverty in 2000 with the help of their monthly Social Security check.

Social Security is a Successful Program—Social Security is a successful program. It is not in crisis. The Social Security Trust Fund is viable through 2043; minor adjustments to the program such as raising the ceiling on taxable wages would guarantee solvency into the next century. How can we undermine this social insurance program which has lifted 13 million seniors out of poverty?

Social Security Helps Average Income and Low-Wage Workers—If workers became reliant for retirement on private investment accounts in the stock market, there would be no benefit program weighted to help low income workers. Average and low income workers receive Social Security monthly checks that are proportionately higher because of a progressive benefit formula. Women—particularly women of color—comprise a major proportion of these low-income workers who benefit from this formula.

• Women are less likely to have pensions or substantial personal savings. Only 30 percent of all older women receive income from a private pension, compared with 47 percent of men. In 2002, half of all older women received less than $5,600 per year from a private pension, compared with $10,340 for older men.

Social Security Funding is Safe for Decades—Talk of a crisis in the Social Security program is false. By the most cautious projections, there is enough money in the Social Security Trust Fund, secured by U.S. bonds, to continue paying full benefits for the next 40 to 50 years. If the U.S. economy keeps growing at the same rate as the past 50 years, Social Security will be able to pay full benefits—without any adjustments to the system—forever. A small adjustment in the payroll tax rate, plus lifting the cap (currently at $90,000) on the taxable wage base, would fund Social Security into the next century, even with slower economic growth.

Social Security Private Accounts Are Foolhardy—A government-guaranteed insurance program is the most dependable means to provide an income floor for retirees. Converting this successful program to a system of private investments in a fluctuating, risky stock market is foolhardy, to say the least. People who retire when the market is "down" may find their investment earnings insufficient to finance their retirement years.

Social Security Benefits will be Cut Under the President's Proposal—The Bush administration favors a plan that would shift the calculation of retirement benefits currently tied to wage increases to one that would be tied to a price index. Because prices do not increase as fast as wages do, over time the effect on Social Security benefits would be dramatic. Monthly retirement benefits could be slashed by as much as 45%! This is the privatizers' plan—to undermine the value of Social Security benefits so that workers would be forced to move to private accounts—regardless of the risk.

Social Security Privatization Will Hurt Everyone, Especially Young Workers—George W. Bush likes to say that his plan would allow younger workers to choose private investment accounts and that workers near retirement or retired currently would not be affected. But permitting millions of younger workers to leave Social Security or divert part of their payroll contributions to private accounts will rapidly reduce revenues to the Trust Fund and make Social Security's long term solvency much worse. Private accounts would saddle the next generation with trillions in debt. The Bush administration and their friends in Congress have depleted government coffers to pay for huge tax cuts to the rich, the build-up of the military and for a very costly war in Iraq. An estimated $2 trillion over the first ten years would need to be borrowed to pay for a transition to a retirement system based on private investment accounts. Younger workers—and their children—moving to private accounts would have to pay the costs of the transition, in addition to having their investments reduced 20 to 30% for brokers' and administrative fees. Over a 20-year period, with interest payments on the debt, the total cost would grow to a staggering $4.9 trillion!

Privatization will undermine women's retirement security and pass a massive debt of $2 trillion or more to our children. Plans to replace guaranteed benefits with risky private accounts would undermine Social Security's purpose as retirement and disability insurance while also cutting benefits. Under privatization, a woman's retirement benefit would depend on her contributions to another government run private account. Because the amount withheld will be based on a percentage of her earnings, her contributions would be less throughout her working years because of pay discrimination and time out for caregiving obligations. Critically important family benefits for death and disability would be lost as would inflation-proofing and guaranteed lifetime benefits that exist under Social Security. With private accounts, workers with low savings would be required to purchase expensive annuities which can not be "passed on" to heirs and may not contain survivors benefits. In addition, insurance companies are allowed to discriminate against women by paying out lower monthly benefits because some women live longer than some men.