The Future of Social Security
Wednesday, March 24, 2004; 1:00 p.m. ET

Although Social Security is currently running large annual surpluses, due to changing demographics, the program is expected to face a shortfall in 2042. While Social Security will still be able to pay about 70% of promised benefits after that, moderate adjustments will be needed to ensure future generations can continue to count on Social Security as the rock-solid foundation of their retirement. But any changes made must not erode Social Security's essential protections including guaranteed, inflation-adjusted, progressive, lifetime benefits. We must also have an honest dialogue about the impact of various proposed changes -- especially on people who rely more heavily on Social Security.

Mary Scott from Bedford, Tex., serves as Chair of the AARP National Legislative Council (NLC), a 25-member all volunteer policy analysis and advisory body to AARP's Board of Directors. Scott's responsibilities include hosting national issue forums on topics like Social Security, reviewing polling research and intensive examination of policy trends and analyses. In her community, Scott has been active in the Retired Teachers Association and is a member of the Nursing Home Ombudsman Advisory Council and the Area Agency Public Policy and Legislation and Public Relations Committees.

Moderator: Greetings, everyone, and welcome to Viewpoint. Our guest today is Mary Scott, a representative from AARP. Let's begin with this question: How can members of Congress collect from Social Security when they do not have to contribute?

Mary Scott: I am so glad you asked this question. A lot of other people have asked this question, as well. There is a lot of misinformation about Social Security floating around, and the idea that members of Congress don’t pay into Social Security is one of the most prevalent myths. I am happy to have an opportunity to clear this up.

All members of Congress do pay into Social Security at the same tax rate as all other workers and their benefits are calculated in exactly the same way. Prior to 1984, federal employees including members of Congress did not participate in Social Security. Instead, they were covered by a separate pension plan. In 1983, legislation was enacted requiring all federal employees hired in 1984 or later to participate in Social Security. That legislation also required all Members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress.

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Oklahoma City, Okla.: Will AARP support the government pension offset and WEP (H 594 and S 349). I called the Okla. office and received the following information -- "AARP will fight for the battles we feel we can win." I wrote AARP May 20, 1999, and did not receive a reply.
Is the win/win your opinion?

Mary Scott: Thank you for this question. We have had many questions about this subject and we know it is of concern to many people. I'm sorry that you did not hear back when you wrote several years ago. We welcome this opportunity to provide complete information. I hope that this is the information you need.

Let me provide you with a bit of background on this issue. In 1977 and 1983 two laws affecting the Social Security benefits of government workers who worked in an other pension system instead of Social Security were passed. One contained the GPO or “offset” legislation, which affects the amount of Social Security benefits a non-covered worker receives as a spouse. The other included the WEP or “windfall” provisions, which affects the Social Security retirement or disability benefits of a person who has worked in both Social Security-covered work and non-Social Security-covered other government work.

The GPO or offset legislation was enacted to correct unequal treatment. Almost from the beginning, Social Security had a rule that did not permit married people, both of whom worked under Social Security, to receive both an earned Social Security worker’s benefit and a Social Security spousal benefit. They could draw only the higher of the two. However, other married workers — who got a government pension from a job not covered by Social Security — could receive the full spousal benefit from Social Security as well as the worker’s pension they earned instead of Social Security. There was no offset for them.

Thus, two-income couples in which one had paid into Social Security and the other had paid into another government pension plan received both spousal and worker benefits. Yet, two-earner couples in which both had paid into Social Security over their lifetime were subject to a “dual entitlement” rule and received smaller total benefits. So out of fairness, Congress extended the “dual entitlement” provision by passing the GPO legislation.

Prior to the enactment of the WEP in 1983, the Social Security benefit formula had an unintended effect. It treated a higher-wage worker from a government career not covered by Social Security, who had relatively few years of Social Security contributions, the same way it treated a long-term, lower-wage worker who paid into Social Security for his/her entire working life.

Congress deemed it appropriate to eliminate this Social Security “windfall.” They passed an alternative benefit formula. This formula applies to people who contributed to Social Security only part of their worklife and who earned benefits under another public pension system.

AARP has not taken a position on GPO or WEP and neither supports nor opposes either piece of legislation. AARP’s public policies are recommended by its all volunteer National Legislative Council and approved by its volunteer Board of Directors. The Board has considered the issues but chose not to adopt policy on either the government pension offset (GPO) or the windfall elimination provision (WEP). Many teachers and public employees have been told they are being singled out for unfair treatment, but the issue is complex and if there were an injustice, AARP would be there fighting to correct it. The Social Security Administration Web site is an excellent resource

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Houston, Tex.: On March 21st, Fox News claimed that Social Security is going bankrupt. Is this true?

Mary Scott: Not at all. Social Security is not going broke. Just yesterday, the Social Security Trustees released their annual report on Social Security’s long-term financing. That report shows that Social Security can pay 100% of promised benefits until 2042. After that, without any changes, incoming revenues will be enough to pay about 70% of benefits for decades to come. This isn’t enough — 70% of the guarantee wouldn’t be fair for today’s retirees and it certainly isn’t fair for tomorrow’s retirees. AARP is in favor of strengthening Social Security so that it continues to provide our children and grandchildren with the same rock solid guarantees that today’s beneficiaries can count on.

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Prince Frederick, Md.: My elderly aunt claims that there are people living in her building from foreign countries who get Social Security checks. They didn't work in the United States - just came over and signed up and got Social Security checks. Can immigrants collect Social Security benefits when they have not contributed?

Mary Scott: No one (except the spouses and dependents of covered workers) can receive Social Security without working and paying into Social Security for at least 10 years (40 quarters). This means that illegal immigrants are not eligible for Social Security.

Some legal immigrants are eligible for Supplemental Security Income (SSI) benefits if they meet strict criteria. But SSI is a completely separate program from Social Security. It is a program for people with very low or no income who are severely disabled or over age 65. SSI is not funded with Social Security payroll taxes, but is paid for entirely through general revenues, so its cost has no bearing on Social Security’s solvency.

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Arlington, Va.: Isn't it true that the "so-called" Social Security Trust Funds are really filled with worthless IOUs?

Mary Scott: Of course not. But this is a very common misconception. By law, all income to the trust funds not immediately needed to pay expenses is invested in securities guaranteed by the U.S. government. These bonds are like the bonds that you or I might buy to save for retirement or for our children or grandchildren’s education. Far from being “worthless IOUs,” those investments are backed by the full faith and credit of the federal government. The bonds earn interest — in 2003 the rate of return earned by the trust funds averaged 6.0%.

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Westbury, N.Y.: What on earth does Social Security have to do with the deficit and why do people like Alan Greenspan suggest that cutting Social Security benefit is necessary to balance the budget?

Mary Scott: This is a very important issue right now. Many people have asked about this. Federal Reserve Chairman Alan Greenspan’s comments that future Social Security benefits should be reduced to balance the budget certainly provoked a great deal of discussion among AARP members! AARP strongly disagrees with Chairman Greenspan’s views. The idea that Social Security should be targeted to reduce or eliminate budget deficits that are unrelated to the program is irresponsible. Social Security has not contributed to the deficit at all. In fact, Social Security’s own growing surpluses make the deficit in the current federal budget appear smaller.

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Enid, Okla.: What does AARP propose to do to strengthen Social Security?

Mary Scott: AARP is concerned about Social Security's future and committed to finding a balanced solution that will bring Social Security to solvency, starting with diversifying the Social Security Trust Funds' investments, raising the maximum amount of wages subject to the Social Security payroll tax, and adding newly hired state and local employees to Social Security.

These are only a few of the options that could contribute to Social Security solvency. And they are a good first step. That is why we are also working to broaden the discussions on strengthening Social Security to focus on all potential options and tradeoffs, rather than how to implement a fundamental restructuring of the program.

AARP is also committed to improving overall retirement security, which includes pensions, savings, and health care coverage. With improved retirement savings, future generations will have a more secure retirement.

Carve out supporters claim they have a solvency plan but their “plan” is usually only to take money out of Social Security. Most won’t tell you where they would get the trillions of dollars needed to pay for the conversion to individual accounts. Given the current budget deficit, this is a significant omission.

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Pittsburgh, Pa.: Hi there! I am 48, a single mother of two and have just been accepted to law school. Based on my current income, I would receive approx $760 a month in Social Security benefits. While in law school, I will continue to work full time. My hope is that I will increase my family's economic security and be able to retire with a pension, savings and Social Security. Will my higher salary after law school lead to reduced Social Security benefits? I am concerned that if I have a pension or savings over a certain amount, my Social Security benefits will be reduced proportionally.

Mary Scott: Congratulations on your acceptance into law school! I really admire you for taking on that challenge while raising your children and working full-time. Unless you take a position working for a state or local government which has its own retirement system in place of Social Security, your future work will not reduce your Social Security benefits. If your earnings as an attorney are higher than they would have been without attending law school, you will most likely end up with higher Social Security benefits, because your Social Security benefits are based on your highest 35 years of earnings.

Social Security was never intended to provide all of an individual’s retirement income. Ideally, your benefits will be supplemented with income from a pension and your personal savings. Social Security is not means or affluence-tested. It doesn’t matter how much other income you have, you will continue to receive your earned benefits.

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Bethesda, Md.: Doesn't Social Security penalize working women?

Mary Scott: I am so glad you asked this question. As a mother of two working women and a former working woman myself, this is an issue that hits close to home. Fortunately, as my daughters and I know, Social Security provides us with a lot of value.

Women do very well under Social Security for three primary reasons. First of all, Social Security’s progressive benefit formula gives those with low and moderate incomes a better return relative to their contributions. Secondly, Social Security benefits cannot be outlived. Finally, Social Security benefits increase every year to help meet rising costs of living. Since women tend to live longer than men, these protections are especially important.

While supporters of carve-outs like to claim that women would do better under such a system, those claims don’t hold up under scrutiny. Under a system of individual accounts carved out of Social Security, the size of an individual’s account would depend largely on how much he or she contributed to the account. Since women tend to have lower earnings and more years out of the paid workforce, they would have fewer dollars going into their accounts. At retirement, because of their longer life expectancies, women would have to make their smaller accounts last over more years.

Divorced spouses might not be adequately protected under a system of carve-out accounts. Social Security provides survivors and retirement benefits to a woman who was married for at least 10 years to the same man, without his benefits being reduced at all. An individual account would likely be divvied up at the time of divorce. As second and third marriages are becoming increasingly common, the account could be divided multiple times, leaving each partner with much less money for retirement.

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Herndon, Va.: Mary, I am extremely angry that the surpluses of Social Security have been stolen by our lawmakers for other expenses/purposes. I feel if this money was repaid with interest and if the SSA money managers were free to invest all surplus money in higher returns than treasury securities, maybe we could eliminate this shortfall. Do you agree with me?

Mary Scott: Well, you would have good reason to be angry if this were true. There is a lot of confusion about this issue. First, let me assure you that the Social Security surpluses have not been stolen. Any funds not needed immediately to pay benefits are invested in US Treasury bonds. These bonds earn interest and are obligations guaranteed by the full faith and credit of the United States government. The government has always repaid the trust fund - with interest - as the bonds have come due.

As for the second part of your question, some have proposed the Social Security Administration hire money managers to invest part of the trust funds in other assets, such as stocks or bonds, just like private pensions plans do. Higher returns would reduce the long-term shortfall. The key difference with this approach vs. carve-out individual accounts is that benefits would still be guaranteed and individuals would not bear risk. There are pros and cons to this type of plan — and they should be debated fully before such a change in Social Security’s investment policy is enacted.

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Bronx, N.Y.: Hello Mary,
I am a 68-year-old worker (to make ends meet) who pays both Social Security payroll taxes, as well as income tax on my Social Security benefit, which is not fair.

When will the Social Security income tax be rolled back? Also, what becomes of the monies that are deducted from my pay check?

Mary Scott: As we have learned from our membership, increasing numbers of people who have reached retirement age are choosing to remain in the workforce. The payroll taxes that you are paying, just like the payroll taxes paid by younger workers, go to pay for Social Security and Medicare.

Beginning in 1984, up to 50 percent of Social Security benefits became taxable for filers with incomes above a certain threshold. Those revenues go to Social Security. In 1994 Congress made up to 85 percent of benefits taxable for beneficiaries with adjusted gross income above certain thresholds. The revenues generated from that second-tier of taxation are directed to Medicare’s Hospital Insurance (HI) trust fund.

Today, close to one in four of all Social Security beneficiaries is affected by the taxation of benefits. AARP opposed the 1994 increase in the taxation of benefits because it disadvantaged people who saved for retirement. However, since Social Security and Medicare face long-term shortfalls and repealing the tax on benefits would take money away those programs repeal in unlikely politically.

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Canada: I hold dual citizenship and have worked for various periods of time in the United States. I am now 67 years of age.

My question - Am I eligible to collect social security benefits?

Mary Scott: You may be. It depends on just how frequently you worked in the United States and how many “quarters of coverage” you earned. You should check with the Social Security Administration. SSA staff can check your earnings records and determine whether you qualify for benefits. You should visit the Social Security Administration's Web site for more information.

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Farmersville, Tex.: I was born in October 1949. At what age will I be able to draw my Social Security?

Mary Scott: This is an easy question to answer. Thanks! You can begin collecting your full Social Security benefits at age 66. You will still be able to begin collecting early retirement benefits at age 62, but they will be reduced to reflect increases in the normal retirement age.

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Sacramento, Calif.: How can I know the history of the Social Security number in the U.S.?

Mary Scott: You should visit the Social Security Administration's Web site section on history. It is filled with fascinating facts and information about the history of this great program.

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Mt. Laurel, N.J.: I am presently divorced. I was married over 20 years. I was informed that I could collect 1/2 of my ex-spouse Social Security. If my earned benefit is higher, can I still collect half of his benefit? Also, how will I know when I can begin able to collect it?
Thank You.

Mary Scott: You are eligible for the larger of your own earned benefit or half of your ex-spouse’s benefit, but you cannot collect both. You can begin collecting early retirement benefits at age 62 if your ex-spouse is eligible for retirement benefits. However, if you remarry, this will affect your eligibility for benefits based on your ex-spouse's earnings. You should visit your local Social Security office. They can help you apply for benefits.

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Austin, Tex.: Why should my grandchildren subsidize Bill Gates in retirement? Why can't rich Babyboomers pay for their own way?

Mary Scott: Eliminating or reducing benefits for those with high retirement incomes sounds appealing, doesn’t it? But to make a real dent in the shortfall, the means-test would have to be set at a fairly low limit. There are just too few retirees with very high incomes to save any big money. Besides, is it fair to contribute to Social Security all your life and then not collect benefits in retirement? Or to sacrifice and save when you’re working and then be penalized for having saved? At AARP, we believe that if everyone pays in, everyone should get the benefit they earned.

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Ringwood, N.J.: Raising the retirement age frequently comes up in discussions about strengthening Social Security. What isn't talked about, however, is how in the current economy, many of those laid off are aged 55+ and how many are choosing retirement because they cannot find work. Should we as a nation be forcing workers to choose early retirement because of a lack of available jobs?

Mary Scott: You really hit on some of the tradeoffs involved with proposals to increase the retirement age for Social Security. Yes, people are living longer and, on average, spending more years in retirement. But we also know that age discrimination is still a problem and many older and mid-life workers who lose their jobs have great difficulty finding new jobs at comparable pay and benefits.

The retirement age for collecting full Social Security benefits has already begun increasing from 65 to 67. We should wait and see how older workers fare when this increase is fully implemented before we seriously consider raising the normal retirement age any further. At AARP, we are also fighting hard against age discrimination and to help employers recognize the value of older and mid-life workers.

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Denver, Colo.: In saving Social Security, aren’t the only alternatives raising taxes, cutting benefits, or putting the money into individual accounts?

Mary Scott: No, there are other alternatives. The worst thing that we could consider is taking money out of Social Security and putting it into individual accounts. Diverting money from Social Security and into individual accounts as some have proposed actually worsens Social Security’s long-term finances. Imagine a glass of water that is three-quarters full. If you dump some of the water out, is your glass more full? Of course not—you have less water available. Taking money out of Social Security has the same effect. A lot of people call such accounts “carve-outs” because they would carve away part of Social Security’s guaranteed benefits.

Supporters of carve-outs like to lump them with options for strengthening Social Security, claiming that “you can either raise taxes, cut benefits or improve Social Security’s returns with individual accounts,” but in reality carve-outs worsen solvency and should not be listed with options that strengthen Social Security’s financing.

Since payroll taxes are used to pay benefits, transferring some of this money from Social Security into individual accounts means that less money will be available to pay already promised benefits. Bigger cuts in guaranteed benefits or larger revenue increases will be required to restore solvency if money is diverted into carve-out accounts.

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Kansas City, Kan.: Does the government pay interest on the IOU's when they take money from Social Security to pay for something else?
I think it would be a good idea if there was money allotted for any new program that is passed into law.If the law is not funded it should not be enforced until then.
Please do not privatize Social Security. People need a steady income,not one that is tied to the ups and downs of the stock market.

Mary Scott: Social Security funds not needed immediately to pay benefits are invested in interest bearing US Treasury bonds. Those bonds have always been repaid with interest as they have come due. Last year the overall interest rate earned on those bonds was 6.0%.

We agree with you completely that Social Security should continue to provide guaranteed, inflation-proof, life-time benefits and oppose diverting any portion of Social Security's revenues into individual accounts.

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Cleveland, Ohio: How is the system hurt if new workers contribute to their own Social Security accounts managed by the Social Security Administrations?

Mary Scott: The idea of letting workers voluntarily invest part of their Social Security contributions in an individual account sure sounds appealing at first glance. But remember, if something sounds too good to be true, it usually is.

Diverting some of Social Security’s revenue into individual accounts would be expensive and worsen solvency. Since current payroll taxes are used to pay benefits to beneficiaries, transferring money into individual accounts means that less money will be available to pay promised benefits. To avoid major benefit cuts, younger workers would have to pay twice — once to fund the new account and again to meet Social Security’s current obligations.

Since the government is running large annual deficits, finding the money to fund the accounts and make sure benefits get paid will likely require incurring massive amounts of new government debt.

Diverting money away from Social Security and into individual accounts also involves trading some of today’s inflation protected, lifetime guaranteed benefit for an account subject to market risk and not guaranteed to last a lifetime or keep pace with inflation. Inflation, market turns or loss of employment can mean that your private account may not have enough money to provide an adequate benefit.

Social Security benefits are progressive — that means that low and middle income workers receive a better return on their contributions than do high income workers. Carve-outs would reduce progressivity and could be especially harmful to those most likely to rely on Social Security.

Social Security is not just about retirement — the program also pays valuable survivors and disability benefits. Many carve-out proposals would weaken these important benefits.

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Atlanta, Ga.: The one thing we thought would be there for us after we retired was Social Security. We need to know that the help we planned on having is there to pay for all our needs. Like so many I retired and even before, I have illnesses that take all of my retirement pay just for drugs even with insurance. What on earth does it look like for our future?

Mary Scott: I can assure you that Social Security will continue to be there for you. As long as there are people working, they will be paying into Social Security, so funds will be there indefinitely. Of course, Social Security is facing financial challenges in the future, but AARP supports taking action to strengthen it soon, so people like you will be able to count on it as long as they need to.

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Fairfax, Va.: Does AARP support private accounts as a part of Social Security?

Mary Scott: Absolutely not if those accounts are funded with revenues currently going to Social Security. We do support private accounts if they are in addition to Social Security rather than in place of ANY part of Social Security's guaranteed, lifetime, inflation-proof benefits.

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Pensacola, Fla.: It is my understanding that Social Security was intended to provide a part of retirement income, not to be an individual's sole income retirement. Is this true? It seems like this point is getting lost.

Mary Scott: You are absolutely right. Social Security was never intended to be an individual’s sole income in retirement. Real retirement security rests on four pillars: Social Security, pensions and savings, earnings and health insurance. Unfortunately, for too many people, Social Security is the only pillar standing strong. We need to look at the other pillars and have a national dialogue on how best to strengthen them to ensure more Americans have real retirement security.

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San Antonio, Tex.: Isn't Social Security a bad deal for African-Americans and Hispanics?

Mary Scott: On the contrary — Social Security is indispensable to African Americans’ overall income security. Most studies claiming Social Security is a bad deal for African Americans have several fundamental flaws. They look only at retirement benefits and completely ignore Social Security’s disability and survivor benefits. Although African Americans have a shorter life expectancy than whites, they rely more than whites, on average, on the life insurance and disability protections that Social Security provides.

African Americans, who have lower average earnings than whites, also benefit from Social Security’s progressive benefit formula. Since poverty rates among African Americans are higher and they are less likely to have other sources of retirement income, they depend heavily on Social Security benefits as a base of income.

Social Security benefits are especially important to Hispanic Americans because they tend to live longer on average than do other Americans. Social Security’s retirement benefits are guaranteed to last a lifetime and provide annual cost-of-living adjustments. Hispanic Americans are also less likely than whites to have pensions or other sources of retirement income, so Social Security benefits are integral to their retirement security.

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Washington, D.C.: To follow up on the question from the divorced woman. Can I collect at age 62 on my work history (with a penalty) and then collect from my ex-husband's number at age 66 without penalty?

Mary Scott: This is a very technical question that depends on your individual situation. I suggest that you visit the local office of the Social Security Administration and discuss it with them.

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Chicago, Ill.: What public information efforts does AARP have underway to educate people about Social Security benefits?

Mary Scott: Thanks for asking. AARP has been doing a series of Social Security town hall forums around the country where members of our Board of Directors and National Legislative Council have been taking questions on Social Security, and talking about the strength of the system. And, of course, we are doing this online forum, and will be doing another one in May.

You can also get regular e-updates from AARP by signing up here.

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Fort Wayne, Ind.: Mary you said "Social Security is not going broke. Just yesterday, the Social Security Trustees released their annual report on Social Security’s long-term financing. That report shows that Social Security can pay 100% of promised benefits until 2042. After that, without any changes, incoming revenues will be enough to pay about 70% of benefits for decades to come." Is this not broke for the person who turns 67 in 2042? They paid full taxes, but get partial benefits? Why should their taxes paid be used to pay benefits of those retired up until 2042?

Mary Scott: This is an example of seeing the glass as half-empty or half-full. I think being to able full benefits through 2042 and more than 70% of benefits thereafter is far "going broke." And that is with no changes at all. As long as there are workers paying into Social Security there will be money into Social Security. Social Security will be there for our children and grandchildren.

While we need to have a real national dialogue on how to strengthen and improve the system, promoting a false sense of crisis does not serve any of us well.

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Springfield, IL: I will be turning 52 years of age in August and am a bit nervous about my ability to retire. As I am sure many people would agree, I would like to retire by age 60 or 62, 2012 or 2014. Will the age limitation for drawing my social security be prohibative for doing so? I believe that my full benefit age is 65 or older and I am nervous about waiting until then to retire.

Mary Scott: I'm glad to hear that you are planning for your retirement now. I would recommend that you consider whether you have enough retirement savings outside of Social Security to retire early. The age at which you can get early retirement benefits under Social Security is 62 and there are no changes scheduled. You should be aware that there is a reduction in benefits if you take them at 62 instead of when you are eligible for full benefits. If you are 52 today, you will be eligible for full benefits when you are 66.

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From Charleston, W.V.: Won't the higher returns of individual accounts lead to higher benefits for most people?

Mary Scott: Higher market returns are not a sure thing. Market averages are just that — averages. If you put one foot in boiling water and the other in ice-water, on average the water is comfortable. The reality, of course, is very different! Personal accounts come with a host of risks. The majority of mutual funds under-perform the market average. The stock market goes down as well as up, and sometimes it stays down for quite awhile. Many retirees who thought they were set financially are having to cut their budgets dramatically or even return to work because the value of their portfolios has declined significantly over the past few years. And remember, Social Security provides more than just retirement income.

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Oklahoma City, Okla.: If COLA is 10%, then the person drawing $1600.00 gets a $160.00 raise and the person drawing $400.00 gets a $40.00 raise. Is this fair?

Mary Scott: Boy, I bet most seniors wish COLAs were 10%! The purpose of a COLA, or cost-of-living-adjustment, is to help make sure that benefits are not eroded over time by inflation. They aren't intended to be a "raise." Without Social Security's annual COLAs many seniors would find themselves dropping into poverty as they aged.

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Oklahoma City, Okla.: Is social security retirement a welfare program?

Mary Scott: Absolutely not! Social Security benefits are earned.

Throughout their careers, workers pay into Social Security and earn valuable insurance for themselves and their families in case they become disabled or die in addition to life-time, inflation-proof, guaranteed benefits.

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Oklahoma City, Okla.: Thanks for answering my questions.

Mary Scott: I appreciate your participation in today's event. I hope you will stay involved in this important issue.

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Nashville, Tenn.: Mary, what do we tell our Congressmen and women to do about strengthening Social Security today? How can they help in these efforts, instead of just using the rhetoric in the elections cycle?

Mary Scott: This is a good question to ask right now. AARP wants to see Social Security strenthened so that it will continue to be there for the baby boomers and their children. What we should not be doing is rushing into something that could make the problem worse in the future. For example, some plans suggest diverting money into so-called "carve out" individual accounts. That is just the thing that we should not do. We should have a national debate about Social Security that is not subject to the pressures and emotions of an election year. Congress and the President need to work on a bipartisan basis to arrive at a solution.

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Denver, Colo.: Considering the trend of employers reducing and doing away with retirement benefits would it not be a good idea to work toward making social security the main retirement income for working people. My employer retirement income is completely inadequate to even think about living on it.

Mary Scott: You bring up an important issue. While ideally a secure retirement rests on four pillars - Social Security, pensions and savings, employment and health insurance - for many people Social Security is their only or main source of retirement income. Unfortunately, this is unlikely to change anytime soon. Many employers are reducing or even eliminating their pension plans and recent market upheavals have reduced the value of personal savings for many people. People of color and women are even more likely to rely on Social Security for most or all of their income in retirement.

Given that the boomers and their children will count on Social Security as the rock solid foundation of their retirement, we must ensure that this vital program remains strong. We should not subject its benefits to individual risk.

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Port Ludlow, Wash.: How can we raise expectations of the boomers? I constantly meet 40-somethings and even mid-50s who say they don't "expect" Social security to be there for them when they retire! IF this psychology previals, people like Greenspan will succeed in cutting SSA b/c that is what most folks will expect is going to happen!
HOW can we stop the bleeding? What to say??

Mary Scott: This is one of those myths about Social Security. Baby boomers can expect to get the Social Security benefits that they have earned. The pyschology you are talking about is meant to create a crisis mentality and weaken support for Social Security. In fact, even if there are no changes made, Social Security can pay 100 percent of promised benefits through 2042 and about 70 percent for decades after that. Making moderate changes to the system soon will ensure that it is there for future generations as well. AARP strongly disagrees with Chairman Greenspan about cutting benefits.

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Garden City, Kan.: What would be the projected effect of completely removing the cap on earnings subject to Social Security taxes? Does AARP support doing so?

Mary Scott: Right now, workers only pay Social Security payroll taxes on the first $87,900 that they earn. Of course, only about 6% have earnings higher than that.

Some have proposed raising or eliminating that cap in order to help fill Social Security's long-term financing gap. AARP supports lifting - but not eliminating - the cap on taxable wages. Today, about 85% of wages in the economy are subject to the payroll tax. Historically, about 90% were covered. But because wages above that cap have increased more rapidly than wages in general, that percentage has dropped. Increasing the percentage of wages subject to the Social Security tax to historical levels would eliminate about 25% of the shortfall.

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Mary Scott: Thank you all for this very stimulating discussion. I am sorry that we were not able to answer all the questions submitted (>400), but I hope we got to the most frequently asked ones.

We will be doing another online forum in May with my colleague and AARP's new president, Marie Smith. Until then, please log on to the AARP Social Security Web page to get the latest developments and to sign up for regular updates.

Mary

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Moderator: This concludes our discussion. Many thanks to Mary Scott, AARP and all who participated.

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