Yesterday, the Social Security Board of Trustees – folks who provide us with the results of Social Security’s annual financial check-up – again sounded the alarm over Social Security’s financial health.
Unless Congress does its job, full benefits can’t be paid on time beginning in just two years for those receiving disability benefits. Further, when today’s 48- year old workers reach their full retirement age in 2033, they and everyone else receiving retirement and survivor benefits will see a 23 percent benefit cut. Today, nine out of ten seniors age 65 and older receive Social Security benefits, which are a major source of income for most seniors.
Since I’ve been Chairman, I’ve been committed to making sure that Social Security will be there not for just today’s seniors, but for their children and grandchildren.
The price of delay gets higher ever year. So the sooner we act – the better. As the Public Trustees informed us yesterday, the changes needed today are bigger than what Congress passed in 1983.
It’s no wonder young people don’t believe they will ever receive benefits. A recent survey by Transamerica Center for Retirement Studies survey found 81 percent of those between the ages of 18 and 34 today don’t believe Social Security will exist when it comes time for them to retire.
As a result, these young people expect most of their retirement to be self-funded, resulting in 70 percent already saving for retirement.
With the retirement of the baby boomers, the decline in traditional pensions, stagnant wages that make it even harder for Americans to save, and Social Security’s impending inability to pay full benefits, Americans face a challenging retirement security landscape.
Bottom-line: Americans want, need, and deserve a Social Security program they can count on, but just as important a program they can understand.
For instance, older workers getting ready to retire are trying to determine when they should retire and what benefits they should apply for. Yet deciding when to take Social Security benefits isn’t just a question of how old you are.
Workers have to answer questions like:
• How long am I going to live?
• Do I want to keep working?
• How much will my spouse receive from Social Security?
As we will hear today, taking benefits at the wrong time can cost thousands of dollars. While Social Security has some tools to help, sometimes these tools aren’t all that helpful.
So what happens when well-meaning programs become so complex that Americans need paid help to figure out their benefits? Americans pay.
In the disability program many pay lawyers to help them receive disability benefits while others are paying financial planners to help them figure out retirement benefits.
Worse, those who can’t afford the help pay with lower benefits than they deserve.
That’s just wrong. There has to be a better way.
Today’s hearing isn’t just about ensuring that Social Security will be there for current and future generations but starting the much-needed conversation of what workers need to know about Social Security as they plan for retirement.