The Future of Social Security and Those Who Depend on It

Private Accounts and Benefit Cuts
For decades, opponents of Social Security have attempted to privatize the program. They propose diverting some of the funds that normally go into the Social Security trust funds into private investment accounts. Some would also cut benefits by changing the formula to calculate initial benefits from a wage-indexed system to a price indexed one, and raising both early and normal retirement ages above the current law.

The Inheritance Myth
The Bush administration asserts that private accounts would allow investors to pass on their accounts to their heirs when they die. What they do not say is that the Social Security survivorship benefit paid to the minor children and spouses of the deceased worker would e substantially cut. If a worker dies at a young age, no amount of inheritance would offset the loss of benefits resulting from the deep cuts in benefits and the potential offsets for diverting funds to a private account.

In recent years, the Alliance for Retired Americans has fought to beat back attempts by the Bush administration and others to establish private accounts and institute the price indexing of initial benefits. Despite our successful efforts, privatization proponents can be expected to return and press their agenda again at the first opportunity.

The Position of the Alliance for Retired Americans
The Alliance for Retired Americans rejects privatization of Social Security. Privatization alters the fundamental structure of the program and does nothing to address the issue of long-term solvency.

The Alliance for Retired Americans rejects all changes jeopardizing the benefits of participants or undermining the Social Security system, including:

• Any increase in the early retirement age or any further raising of the normal retirement age beyond current law;

• Any change in the Social Security benefit formula increasing the number of years of earnings counted or indexing benefits to price instead of wage growth; and

• Any alteration to the Social Security disability insurance program that restricts eligibility and/or undermines due process through claims and appeals.

Source: ARA Issue Brief
The Future of Social Security and Those Who Depend on It-May 2007