For a generation now, working families have been squeezed by stagnant wages and rising costs for housing, health care, and college. Even as families have cut down on their expenses for things like food, clothing, furniture, and appliances, it hasn’t always been enough. Housing, health care, transportation, child care, and the costs of college have squeezed middle-class families, and they have been forced to take on more and more debt just to make it from payday to payday.
One major consequence of these increasing pressures on working people is that the dream of a secure retirement is slowly slipping away. Half of all workers have no workplace retirement savings plan. Nari Rhee, Nat’l Inst. on Retirement Sec., The Retirement Savings Crisis: Is It Worse Than We Think? 3 (June 2013), http://www.nirsonline.org/storage/nirs/documents/Retirement%20Savings%20Crisis/retirementsavingscrisis_final.pdf. Among working families on the verge of retirement, about a third have no retirement savings of any kind, and another third have total savings that are less than their annual income. Id. at 11.
Add all of this up—the sharp decline in individual savings and more individuals entering retirement with debt—and the result is a retirement crisis that is as real and as frightening as any policy problem facing the United States today.
More and more retirees must depend on the safety and reliability of Social Security. Social Security works—no one runs out of benefits and the guaranteed payments don’t rise and fall with the stock market. Today, two-thirds of seniors rely on it for the majority of their income in retirement, and for 15 million seniors, this safety net is the only thing keeping them out of poverty. Alison Shelton, AARP Pub. Pol’y Inst., Social Security: Still Lifting Many Older Americans Out of Poverty, AARP Blog (July 1, 2013), http://blog.aarp.org/2013/07/01/social-security-still-lifting-many-older-americans-out-of-poverty.
Monthly payments are modest, averaging about $1,250 (Monthly Statistical Snapshot, September 2013, Soc. Sec. Admin. (Oct. 2013), http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot), and over time the benefits are shrinking in value. But some in Washington are actually fighting to cut benefits instead of addressing the retirement crisis head on and working to strengthen this lifeline for seniors.
Whatever we do must start with basic facts: Today Social Security has a $2.7 trillion surplus. If we do nothing, Social Security will be safe for the next 20 years and, even after that, Social Security will continue to pay about three-quarters of current benefits in perpetuity. Bd. of Trs., Fed. Old-Age & Survivors Ins. & Fed. Disability Ins. Trust Funds, The 2013 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (May 31, 2013), http://www.ssa.gov/oact/tr/2013/tr2013.pdf. This doesn’t mean we shouldn’t act. Instead, this tells us that with some modest adjustments, we can keep the system solvent for many more years—and could even increase benefits. With some sensible changes, a strong and safe system is within reach.
Seniors have worked their entire lives and have paid into the system, but right now, more people than ever are on the edge of financial disaster once they retire—and the numbers continue to get worse. If we want a real middle class—a middle class that continues to serve as the backbone of our country—then we should be talking about expanding Social Security benefits, not cutting them.
Even with a strong Social Security system, some people fall through the cracks. Congress created the Supplemental Security Income (SSI) program in 1972 as a replacement for a variety of grant programs intended to assist the elderly, the disabled, and the blind. The program provides need-based support to more than 8 million of our poorest and most vulnerable citizens, including about 1.3 million children. For about 60 percent of recipients, SSI is their only income, and even if they are receiving the maximum benefit, which is just over $700 a month, many recipients are below the poverty line.
SSI provisions designed to encourage savings and work and family contributions have been eroded by inflation since SSI was signed into law. If those limits had been indexed to their original values, the dollar limits would be 5.5 times higher than they are today. This decline has had drastic consequences for beneficiaries, undercutting even the most basic financial security. Senator Sherrod Brown (D-Ohio) and I have introduced the SSI Restoration Act to bring SSI up to date and help keep our nation’s most vulnerable out of poverty.
The conversation about retirement, Social Security, and SSI benefits is not just a conversation about math. At its core, this is a conversation about our values. We must honor our promises, make good on a system that millions of people paid into faithfully throughout their working years, and support the right of every person to retire with dignity.
Elizabeth Warren is the senior U.S. senator from Massachusetts. She is an active consumer protection advocate and has served as chair of the Congressional Oversight Panel created to oversee the Troubled Asset Relief Program (TARP).