Boost in understanding sought for Social Security


WASHINGTON -- Social Security Commissioner Shirley S. Chater called yesterday for an education campaign to overcome a "distinct lack of confidence" among young Americans that the insurance system will be there when they need it.

Noting that if no changes are made to the Woodlawn-based agency, Social Security taxes and interest will be insufficient to pay at the full benefit levels early in the next century, she said: "Yes, Social Security does have an exhaustion date in the near future. The good news is we have 35 years before that critical date is here."

That, she suggested, was ample time to solve the solvency problem and make the system "healthy for another 60 years." In the meantime, she called for local community meetings and a national advertising push to bolster public confidence, particularly among the young.

"There are these unsettling feelings that have begun to emerge about Social Security's future, particularly among young workers," she said. "One reason for this might be the fact that they know less about it than we do."

When the program was introduced in 1940, young workers had to go to a Social Security office to get their card before they could get a job. But since 1987, Americans have been issued Social Security cards at birth, thus avoiding what she called "this rite of passage."

Typically, she said, their first awareness of the social insurance system, which provides pensions for contributors and benefits for the eligible disabled, is when they see the FICA tax deduction from their first paycheck. "All this is very unsettling and does lead to a distinct lack of confidence in the program," Ms. Chater told the Woman's National Democratic Club here.

The results, she said, ranged from calls to cut Social Security and use its funds to balance the budget to generational conflicts "with the younger generation puzzling over why should they support the older generation?"

"Young people think it costs too much," Ms. Chater said, countering that young contributors are eligible for the Social Security disability program, equivalent, on average, to a more expensive private disability insurance policy worth $221,000.

Noting that 42 percent of men and 28 percent of women die or become disabled before they reach pension age, she said the average Social Security protection for a surviving widow or widower was equivalent to a private life insurance policy of $250,000.

Social Security pensions were designed to supplement private pensions and savings. But Ms. Chater noted that only 33 percent of men and 13 percent of women have private pensions. Americans, she said, save an average of only $1,000 a year toward retirement. To maintain their lifestyles, Ms. Chater said, retirees need about 70 percent of their preretirement incomes.

The Social Security Trust Funds, invested in government securities as a financial reserve for the system, will continue to grow, passing the $1 trillion mark at the turn of the century, she said. But 25 years from now, the retirement of the "baby boomers" -- those born between 1946 and 1964 -- would create a shortfall in revenue as the contributing work force shrinks and the number of retired beneficiaries grows.

Unless changes are made before 2030, there would be enough revenue to pay only 75 percent of an individual's full-benefit level, and the balance would have to be made up from the trust funds.

Ms. Chater rejected suggestions, floated in Congress, that contributions to Social Security be voluntary, or that its revenue be used to reduce the federal budget deficit. She also questioned the notion that some money in the trust funds would be better invested in private stocks than in government securities.

"What we have to look at is: Is it safe enough?" she said. "Are we willing to take that risk?"

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