November 17, 2010
Deficit Commission Co-Chairs Release Recommendations on Social Security
The Co-Chairs of the Washington deficit commission (Erskine Bowles and Alan Simpson) released a report on their recommendations to reduce the national deficit. As expected, the Co-Chairs proposed cuts to Social Security for both current and future retirees. The Alliance for Retired Americans opposes these recommendations. Please read below for 10 reasons why the recommendations are bad for retirees and all generations.
The final deficit commission report will be released on December 1. The Illinois Alliance for Retired Americans will continue to inform you about the progress of the commission and our efforts to protect Social Security.
1. Deeply cuts the benefits of middle-class families.The proposal would cut retirement benefits by more than 35% for young people entering the workforce today. Today’s 20-year old workers who retire at age 65 would see their benefits cut by 17% if their wages average $43,000 over their working lives, by 30% if their wages average $69,000 over their working lives, and by 36% if their wages average $107,000 over their working lives, according to the Social Security Chief Actuary.
2. Closes Social Security’s long-range funding gap primarily by cutting already low benefits, rather than by raising taxes on those who can most afford to pay. Ninety-two percent of Social Security’s projected funding gap is closed by cutting promised benefits, according to the proposal. Social Security’s benefits are already inadequate – just $13,000 a year on average – and should not be cut further. Instead, Social Security’s long-range funding gap could be closed, as most Americans want, by requiring those employees (and their employers) who make more than $107,000 a year to pay Social Security taxes on all their wages, as the rest of us do who earn less.
3. Raises the retirement age to 69. This is a 13% benefit cut on top of the 13% cut already made when the retirement age was increased from 65 to 67, according to the Social Security Administration.
4. Raises the early retirement age to 64. Most Americans claim Social Security benefits at age 62 even though the benefits are currently reduced by 25%, when they do so. Millions take early retirement because they work in physically demanding jobs, have health problems, or can no longer find work.
5. Discriminates against lower-wage workers. Over the last quarter century, life expectancy of lower-income men increased by one year compared to five years for upper-income men. Lower-income women have experienced declines in longevity. Yet, the higher retirement age applies to rich and poor, healthy and sick, alike. In effect, the proposal says to lower wage workers that they must work longer because the rich are living longer!
6. Reduces the annual Cost of Living Adjustment (COLA) for Social Security beneficiaries. The “chained CPI” proposal would reduce benefits by 0.3% a year on average. This will result in a 3.7% cut in benefits after 10 years in retirement beginning at age 65 and a 6.5% cut after 20 years, according to the Social Security Chief Actuary.
7. Hurts current retirees, contrary to promises made by the Co-Chairs. The change in the COLA calculation would begin in 2011 and affect all beneficiaries, not just retirees.
8. Breaks faith with our nation’s veterans and service members. Social Security benefits are veterans’ benefits – 43% of veterans receive Social Security. Our men and women in uniform (and their families) will see their Social Security disability benefits cut deeply if they are seriously injured in combat. If they die in combat, their survivors’ benefits will also be cut substantially. And veterans’ retirement benefits will be cut significantly just like for all other Americans.
9. Harms our grandchildren the most. In the name of helping our grandchildren, the proposal cuts their benefits the most. The younger a person is the deeper the cuts because of the increase in the retirement age and the changes in the benefit formula.
10. Breaks Social Security’s promise with hard-working Americans. Social Security belongs to the people who have worked hard all their lives and contributed to the program. It is based on a promise that if you pay in then you earn the right to guaranteed benefits. The Co-Chairs’ proposal would break that promise.
by: Emily Stuart