Forum: Social Security: a women's issue

• Article
• Comments ()
• Click-2-Listen
• Videos

By

The chairman of the Federal Reserve ruffled political feathers when he stated the obvious: The government can't pay all the benefits it has promised under Social Security.

In coming weeks, the Social Security Board of Trustees will release an annual report echoing Mr. Greenspan's warning. This is old news: For years, the trustees' report has warned looming Social Security deficits must be addressed.

These warnings are a nuisance to the politicians who seem to be meticulously avoiding a serious discussion of Social Security problems. Sen. John Edwards, North Carolina Democrat -- then still running to lead the executive branch that administers Social Security -- called Mr. Greenspan's remarks an "outrage."

Sen. John Kerry, Massachusetts Democrat, also choose to avoid the real problem Mr. Greenspan highlighted. Instead, he tried to link Mr. Greenspan's suggestion that future benefits might need to be trimmed with the current budget deficits that he blames on Mr. Bush: "The wrong way to cut the deficit is to cut Social Security benefits."

Candidates can try to spin Mr. Greenspan's comments for political advantage, but American women can't afford to ignore his warning.

Women have the most at stake in the Social Security debate. We live longer than men, have lower average incomes, and have fewer opportunities to save for retirement during our working years. Consequently, 1 in 3 unmarried senior women depend on Social Security for more than 90 percent of their retirement incomes. As Mr. Greenspan suggested, an honest assessment of the facts reveals women should be concerned about Social Security's future.

In about 10 years, Social Security will begin paying out more in benefits than it collects in taxes. In 40 years, when today's young workers begin retiring, Social Security will be able to pay only about two-thirds of promised benefits. Those retirees will either face drastically reduced benefits or payroll taxes will skyrocket -- a frightening prospect given that Social Security taxes already claim 12.4 percent of each worker's wages.

Over the next four decades, payroll tax rates would have to increase by nearly half to pay all currently promised benefits. And as rising payroll taxes increase dependency on Social Security by crowding out private investment, it will become even more difficult to address Social Security's flaws.

We can act in time to avoid this nightmare. Allowing current workers to use a portion of their Social Security taxes to fund personal retirement accounts would begin addressing Social Security's long-term financial problems. Workers would invest in bonds and stocks and accrue a significant nest egg throughout their working lives, which could be drawn upon at retirement.