Women and Social Security Alert (WomenSSA)
Items in This Alert
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| Social Security Accurate Benefit Calculator (ABC)
A new sophisticated Social Security calculator shows that most individuals generally lose benefits under President Bush’s plan for Social Security privatization. The Center for Economic and Policy Research (CEPR), in collaboration with the Institute for Women’s Policy Research (IWPR), has created an online Social Security Accurate Benefit Calculator (“ABC”). (It is available on the IWPR Social Security website or CEPR’s website). This calculator compares Social Security benefits under both the current system and Bush’s privatization proposal based on Model 2 from the President’s Commission on Social Security report released in December 2001. The proposal would allow individuals to divert 4 percentage points of their Social Security payroll taxes (currently totaling 6.2% of wages for the employee) into private accounts beginning in 2009, in combination with benefit cuts through a price-indexed benefit formula. Unlike other online Social Security calculators currently available on the web, the ABC allows users to plug in various options—planned retirement age, expected years taken off from work, marital status, stock return rates, costs for purchasing an annuity, and administrative fees. It also provides detailed information on future benefits under different scenarios—scheduled benefits under current law, payable benefits under current law if Social Security exhausts its trust fund in 2052, benefits under the Bush plan when you opt for private accounts or when you don’t opt for private accounts, the replacement rate for each of the different scenarios, the maximum amount you would accumulate in your private accounts, and so forth. The ABC is unique in providing users with an option for expected years off from work, an option particularly important to women since many women are likely to take time off or work part-time due to caregiving responsibilities for children or other family members. Here are the results from the ABC for a person who is 25 years old, earning $28,000 a year, planning to retire at age 67, without taking any years off from work, and using other default options in the calculator. For this person, scheduled benefits under current Social Security would be $1,680 per month at retirement (in 2005 dollars) with a replacement rate of 42.4% (the ratio of retirement benefits to the earnings prior to retirement). If the person takes the private account option under the Bush plan and experiences a 4.35% rate of return on stocks (a default rate in the calculator based on the profit growth projection by the Congressional Budget Office), total benefits including returns from the private account would be only $1,128 per month; the replacement rate would be just 28.5%. That is, Social Security benefits under the Bush plan would be nearly one-third less than the benefits under the current system for the person in the example. Even if we assume a higher rate of return on stocks in the calculator—5.85% for instance by adding additional basis points to the default rate—total benefits under the Bush plan for the person in the example would still be only $1,211 per month. Please try out your own scenarios in the ABC to see how the privatization plan would affect your benefits (visit the IWPR Social Security website or the CEPR website). Social Security by Race and Ethnicity A recent event and several new publications demonstrate how heavily racial and ethnic minorities rely on Social Security. > “Changing Social Security: The Impact on African Americans” The Joint Center for Political and Economic Studies sponsored a panel discussion on Social Security privatization on Capitol Hill on March 1. Panelists included Representatives Robert Scott (D-VA) and Charles Rangel (D-NY), as well as researchers and advocates. While there was agreement that everyone ought to have adequate retirement income, and that African Americans, in particular, deserve to build more wealth, the panelists did not agree on the best way to achieve those goals. Many of the speakers discussed how greatly African Americans depend on Social Security’s guaranteed benefits and therefore how privatization would be especially detrimental to them. Dr. Maya Rockeymoore, Congressional Black Caucus Foundation, Inc. explained two “pitfalls of privatization”:
For additional details, please see a Congressional Black Caucus Foundation report, The Social Security Privatization Crisis: Assessing the Impact on African American Families by Dr. Rockeymoore. Also, see Empty Promise: The Benefit to African American Men of Private Accounts Under President Bush’s Social Security Plan by Dr. Dean Baker regarding whether private accounts would be inheritable. > Children Get Social Security, Too by William Spriggs, the recent cover story from the Poverty and Race Research Action Council’s newsletter, features important facts on African Americans and Social Security:
> African American, Hispanic, and White Women Would Experience Much Greater Poverty Without Social Security AARP’s fact sheet, Social Security and Women: Some Facts based on 2003 US Census Bureau data, shows the impact of Social Security on women of different racial/ethnic groups. With Social Security benefits, the current poverty rate among women 65 and older is 26% for African American women, 24% for Hispanic women, and 10% for white women. If these women did not receive Social Security, more than half of them would live in poverty; without Social Security benefits, the poverty rate among those 65 and older would be 61% for African American women, 55% for Hispanic women, and 51% for white women. Social Security Fact Sheets by Congressional District Using data from the Social Security Administration and the US Census Bureau, the Economic Policy Institute (EPI) has compiled information on who gets Social Security benefits by state Congressional Districts. A separate fact sheet for each state provides a Congressional District breakdown with the information on: total number of Social Security recipients, percentage of population receiving Social Security, and percentages of Social Security recipients for different types of benefits (retired workers, disability workers, spouses, surviving spouses, and children). The fact sheets are available at http://www.epinet.org/newsroom/releases/2005/socsecfactsheetsbycd Recent News and Poll Results—Dissent Among Policymakers and Public Over Proposed Social Security Privatization The Administration’s campaign to privatize Social Security has not only been unable to generate support from Democrats, but many Republican leaders are expressing their concern that neither the Congress nor the public are embracing the President’s plan. Recent poll results have also made it apparent that many Americans oppose Social Security privatization. According to a survey conducted by the Pew Research Center for the People & the Press, resistance is increasing among Americans and is even stronger among women. Three months ago, 30% of women and 31% of men opposed privatization; now, 41% of women are against privatization compared with 35% of men. A New York Times/CBS News poll also found that 51% of Americans think Social Security privatization is a bad idea, and that when they learn private accounts would mean a cut in guaranteed benefits, 69% of those surveyed oppose it. Join us for the Institute for Women’s Policy Research Eighth International |
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