The Urban Institute is holding a series of forums this summer on Social Security, including one last week called “The Future of Social Security: Solvency, Adequacy & Equity, and Work” (Click here for information on the July forum). Panelists, including Virginia P. Reno, advisory board member for the Elder Economic Security Initiative, discussed how changes in demographics will affect the Social Security system.
The media and some politicians often use overreaching phrases like “crisis” and “going bankrupt” when referring to Social Security. This misinformation does nothing to further the debate and instead leads to a grave misunderstanding about a popular program. Seventy-five percent of Americans say it is critical to preserve Social Security -- even if it means paying higher taxes.
The truth is that Social Security is one of the most successful social programs ever created. Social Security payments have helped millions of elders stay out of poverty. In fact, about 1 in 10 elders is considered poor. Without Social Security payments, the number of elders relying only on retirement savings would increase significantly and almost half of our nation’s seniors would live below the federal poverty level.
Some argue that Social Security is the cause of our nation’s budget deficit and that its benefits represent too much of our nation’s gross domestic product (GDP). Currently, however, Social Security benefits are just 4.9% of GDP. In 2035, Social Security will be about 5.8-6.1% GDP and will remain at that level for 75 years after that.
This increase is a reality, but this isn’t the first time a federal program has shifted the division of GDP in this country. When Baby Boomers were children, the share of GDP spent on public schools rose by 2.8% between 1950 and 1975. Now that this generation is retiring a shift in the GDP spent on Social Security makes sense.
So, instead of finding ways to scare people into thinking Social Security is disappearing, we must figure out how to plan for the GDP increase, preserve benefits for elders and fulfill the promise of Social Security for future generations.
- Kelly Stellrecht
Field & Program Associate
Elder Economic Security Initiative
More information on Social Security can be found at the National Academy of Social Insurance (NASI).