Join Social Security Works – Washington and hundreds of your Seattle friends and neighbors as we celebrate the 80th anniversary of Social Security’s, and the 50th anniversary of Medicare!
We are rallying at Westlake Park on August 8th at 1 p.m.
Speakers
Sen. Bernie Sanders, US Senate
Rep. Adam Smith, US House of Representatives
Sen. Pramila Jayapal, Washington Legislature
Hon. Kshama Sawant, Seattle City Council Member
Lynne Dodson – Secretary Treasurer, Washington State Labor Council AFL-CIO
Heather Villanueva – Senior Community Strength Organizer, SEIU 775, Board member, Ingersoll Gender Center
Rebecca Saldana – Executive Director, Puget Sound Sage
Gerald Hankerson – President of Alaska, Oregon, Washington State Area Conference NAACP
Marcelas Owens – Youth leader, Washington CAN!
Hugh Foy, MD. Physicians for a National Health Plan Western Washington, Professor of Surgery, UW School of Medicine, Director of the Surgical Specialties Clinic, Harborview
Jackie Boschak – President of Washington Alliance for Retired Americans President
Entertainment
Jim Page, musician and activist
Daniel Pak of Kore Ionz
Geo Quibuyen of Blue Scholars
Social Security and Medicare are crucial tenets of retirement security. They are the most successful anti-poverty programs in the history of the US, but face unrelenting corporate attack. Join us as we celebrate Social Security and Medicare while calling on our elected officials to protect and expand these program by scrapping the cap on taxable income, adopting the caregiver credit, and using the CPI-E to calculate benefits.
Some states (California, most recently) have taken concrete and proactive steps to dealing with this issue. Others – including our own – have studied ways to fix the problem. But little has been done on the national level in many years to secure retirements for everyday Americans.
Whether because of partisan gridlock, or the fact that as a “long-term issue” retirement security seems to be relatively unimportant (espeically given to the number of short-term debacles/crises at play), there is only one proposal on the table nationally that would make saving for retirement more widely available: a plan by Senator Tom Harkin (D-IA).
Harkin’s plan would make it easier for employers without a pension plan to offer one, which would certainly be an upgrade to the status quo. But unlike Social Security – this country’s best national retirement program to date – there would be no mandate to save, which would still leave many workers without retirement security.
At the federal level, there hasn’t been a real push for a mandatory private pension system to supplement Social Security since a presidential commission recommended doing so in early 1980. And that idea, not surprisingly, was dead-on-arrival when Ronald Reagan took office shortly thereafter.
But as people get a better sense of the crisis, more stakeholders are joining the chorus in support of improving retirement security. In May, BlackRock – the largest investment firm in the world – CEO Laurence Fink said, “We need a comprehensive solution to retirement savings that includes some form of mandatory retirement savings.”
Some experts have pointed out Australia’s “superannuation” account system. Put in place two decades ago, it currently holds more than $1.6 trillion in assets, “giving Australians one of the highest per capita retirement savings pools in the world.” The plan requires that employers contribute 9% of pay to every worker between the ages of 18 and 70. That money, like a 401(k), is owned and managed by individuals.
For the time being, a superannuation plan might not be feasible. But it does show the impact of mandatory nationwide plans – substantially increased investment and, consequently, a more secure retirement for retirees. Fortunately, there is a national plan in the U.S. that we could use right now to improve retirement savings: Social Security.
Like Australia’s plan, Social Security is nationwide, mandatory, and has substantially improved retiree economic security over the past half-century. Scrapping the cap on taxable income for Social Security (so those earning over $110,000/year pay in) would infuse enough cash to quell many critics’ concerns about solvency, and even expand benefits for students and low-income retirees. It wouldn’t be 9% of pay, such as in Australia, but it would certainly be a step in the right direction.
The switch to chained CPI wouldn’t just reduce benefits, including Social Security and Veterans’ benefits, but could also impact future federal tax rates paid by most people.
Various news reports have stated that the Obama administration plans to include cuts to Social Security benefits in its budget proposal. What is less frequently communicated is that such cuts would likely be accompanied by tax increases on the middle class, in violation of one of President Obama’s campaign promises to not increase taxes on those earning under $250,000 per year. These cuts would also impact retirement and disability benefits for veterans.
Many commentators and pundits will described the tax increases and cuts to Social Security and other benefits as a “tweak,” or “technical change,” an “adjustment” or, slightly more honestly, a “gimmick.” This is because the reported proposal will involve changing the calculation of the annual cost of living increase, one measure of inflation, by switching to a new formula known as “chained CPI” (chained Consumer Price Index). Supporters argue that this is simply a more accurate way to calculate changes in the cost of living over time.
It might be, but even if it is a more accurate measurement of cost of living changes for the population overall, there’s no reason to believe that it is a more accurate measurement of those changes for the elderly, the primary recipients of Social Security benefits. Advocates of using chained CPI who claim that their support for it is due to its increased accuracy should also support the construction of a well-researched index specific to the population of retirees. Unsurprisingly, they generally do not, as their interest is in finding a way to cut benefits without anybody noticing. Supposed accuracy is just an excuse, not the real reason.
Perhaps as importantly, the switch to chained CPI wouldn’t just reduce benefits, including Social Security and Veterans’ benefits, but would also impact future federal tax rates paid by most people. Under current law, tax brackets are indexed to the CPI, meaning that a switch to chained CPI could cause those brackets to increase more slowly. People whose incomes are increasing would face higher tax rates more quickly than under current law.
However politicians might wish to hide these facts, a benefit cut is a benefit cut and a tax increase is a tax increase. Personally, I’m in favor of future tax increases when unemployment has fallen farther and contractionary fiscal policies would be less likely to harm the economy, but I’m not in favor of tax increases which fall heavily on the middle class. Any contractionary policy is madness right now, given the weak economy, and increasing the tax burden on the middle class is madness in a time when the 1% are doing so well relative to everybody else.
Cutting promised Social Security benefits is also madness at a time when we’re facing a severe retirement savings crisis. Contrary to popular belief — at least among those who are not current recipients — promised Social Security retirement benefits are already not very generous, with median monthly retiree payouts equal to about$1230. Most people nearing retirement age lack the necessary savings to maintain their pre-retirement lifestyles, as they lack defined benefit pensions and the 401(k) system has generally failed to provide for them adequately.
Right now the focus should be on increasing benefits, both for retirees and for veterans, some of whom have sacrificed more than most of us can comprehend, not cutting them. They all deserve a future of dignity and economic security, not deprivation and fear. And increasing taxes on the middle class is unfair and counter to the promises made during the election campaign.
One can refer to the potential switch to chained CPI as a kind of gimmick, but it’s a gimmick which will result in increased economic hardship for most of us. It is a gimmick which raises tax and reduces promised benefits. It is a gimmick we should all reject.
Duncan Black writes the blog Eschaton under the pseudonym of Atrios and is a fellow at Media Matters for America. He holds a doctorate in economics.
Second President of the United States John Adams lived to age 90, longer than all but two U.S. Presidents.
In 1983, the so-called “Reagan Reforms” made some big changes to Social Security including eliminating the survivors benefits for college students, boosting the payroll tax, and raising the retirement age from 65 to 67. As a result, anyone born after 1960 must now wait until age 67 to receive their full Social Security retirement benefits.
But now some conservative thought-leaders and wealthy CEOs are again championing lifting the retirement age, this time to 70. Their argument probably sounds familiar to anyone who remembers the 1983 reforms: as people live longer, the retirement age should adjust upward. It sounds reasonable to people who have white collar jobs working in air-conditioned offices – but for millions of working Americans, the reality is much different.
One of the most common arguments in favor of raising the retirement age is that average life expectancy has shot up since the inception of Social Security, from age 60 in 1930 to nearly 79 today. Don’t be misled. The change in overall life expectancy mostly reflects lower infant mortality, not longer lifespans for adults.
In 1939, infant mortality rates were extremely high, but once age 65 the average American could expect to live another 13.4 years, or to age 78. Today, better health care and fewer infant deaths means overall life expectancy has gone up. But life expectancy after age 65 – a more accurate way to predict how long people are really living in retirement – hasn’t changed nearly as much.
As of 2008, the average American who makes it to age 65 could expect to live 19.6 years. That’s just 6 years longer than in 1939, and less than 2 years longer than in 1979 – and even that number overgeneralizes, because it ignores other factors that affect life expectancy, including gender, race, and income. A Social Security Administration study found income inequality plays a big role in life expectancy. For workers in the top half of the earnings distribution, average life expectancy is 86.5, but for those in the bottom half it’s just 81 — a gap of more than 5 years that continues to grow.
Race is another important factor for life expectancy at age 65. The most recent data show black men reaching age 65 have an average life expectancy of just 81, three and-a-half years less than the average for the total U.S. population. Total life expectancy for African Americans is 74.5, while it is 78.8 for white Americans.
American workers that are living longer are, on average, better educated, more affluent, and white. Further raising the retirement age will undoubtedly have a profoundly negative impact on millions of Americans, primarily those with less education, lower earnings, and racial minorities.
If you weren’t able to attend the Social Security forum in Tacoma on February 20th, watch this short video about how we can address the long-term issues facing Social Security in a way that protects and improves our already great Social Security system. Featuring CEPR Co-director Dean Baker, EOI Policy Director Marilyn Watkins, and others.
Video edited by Kathy Cumming at the Washington State Labor Council
A column from USA Today, by economist Duncan Black:
Virgilio Marquina and other protesters rally together outside the office of U.S. Sen. Marco Rubio on December 10, 2012 in Doral, Florida. (Photo: Joe Raedle, Getty Images)
Recent and near-retirees, the first major cohort of the 401(k) era, do not have nearly enough in retirement savings to even come close to maintaining their current lifestyles.
We need an across the board increase in Social Security retirement benefits of 20% or more. We need it to happen right now, even if that means raising taxes on high incomes or removing the salary cap in Social Security taxes.
Over the past few decades, employees fortunate enough to have employer-based retirement benefits have been shifted from defined benefit plans to defined contribution plans. We are now seeing the results of that grand experiment, and they are frightening. Recent and near-retirees, the first major cohort of the 401(k) era, do not have nearly enough in retirement savings to even come close to maintaining their current lifestyles.
Frankly, that’s an optimistic way of putting it. Let me be alarmist for a moment, because the fact is the numbers are truly alarming. We should be worried that large numbers of people nearing retirement will be unable to keep their homes or continue to pay their rent.
According to the Center for Retirement Research at Boston College, the median household retirement account balance in 2010 for workers between the ages of 55-64 was just $120,000. For people expecting to retire at around age 65, and to live for another 15 years or more, this will provide for only a trivial supplement to Social Security benefits.
And that’s for people who actually have a retirement account of some kind. A third of households do not. For these people, their sole retirement income, aside from potential aid from friends and family, comes from Social Security, for which the current average monthly benefit is $1,230.
There are good proposals out there for improving the private aspect of our retirement system. Having employer-based 401(k) contributions be opt-out rather than opt-in is one such proposal. There are other commendable suggestions for ways to simplify personal financial management.
But none of these ideas will help people who are nearing retirement. Only the possibility of several decades of compound returns make the personal financing of retirement a realistic idea for most people; those with only a few working years left cannot benefit from this. Absent an unexpected windfall, such as lottery winnings or inheritances, most 60-year-olds lack any capacity to significantly increase their savings.
Even if we do find ways to improve the framework for self-funding retirement, how, exactly, do we expect younger workers, who might benefit from these improvements, to start saving significantly for their retirement? Soaring tuition and fees at universities, combined with the associated soaring student loan borrowing, have led many people to start their working lives already deeply in debt. According to theProject on Student Debt, the members of the class of 2011 with student loans had an average of $26,000 outstanding.
These are mostly 22-year-olds who have never worked full time and who are finding it difficult to find good jobs in the age of the Great Recession. They’re beginning their working lives in the hole. Understandably, and necessarily, retiring that debt is going to be a priority over retirement savings. One might imagine that saving for a mortgage down payment and even spending a few bucks to enjoy life might be priorities too. At the very minimum, beginning their personal retirement savings will be delayed by years.
People who go beyond undergraduate education and go on to graduate or professional schools can find themselves even more deeply in debt. The cost of law school is prohibitive for most. Many graduates effectively find themselves with a mortgage-sized debt but without the house.
Those who, for whatever reason, did not choose to further their studies might lack the large levels of debt, but they also generally lack the opportunities to obtain jobs with decent wages and benefits, or any benefits at all.
If the consensus is that we need policies in place to ensure that the vast majority of people have at least a comfortable retirement, then we need to adjust our current failing policies. Expecting people to save sufficiently for their retirement, even if those savings are subsidized by our tax code, is unrealistic.
The 401(k) experiment has been a disaster, a disaster which threatens to doom millions to economic misery during the later years of their lives. Proposals to improve our system of private retirement savings — even good ones — will offer little to no help for the baby boomers who are currently nearing retirement, and are also unlikely to be of sufficient help for current younger workers. We need to increase Social Security benefits, now and in the future. It’s the only realistic way to provide people with guaranteed economic security and comfort post-retirement.
