Securing Our Future: The Importance of Social Security
In today's world, few things are as deeply woven into the fabric of our nation as Social Security. For more than eight decades, this bedrock program has offered economic security and dignity to millions of retirees, people with disabilities, and surviving spouses and children. It is a sacred promise between the government and the American people who pay in and earn their Social Security over a lifetime of hard work.
At its core, Social Security is a vital pillar of retirement security. Over the past years, as traditional employer-paid pensions have declined and retirement savings have shrunk, Social Security still provides guaranteed income Americans can count on throughout their lifetime.
Today, 67 million people benefit from Social Security. Forty percent of older Americans rely on Social Security for more than 50 percent of their family income. Fourteen percent relies on Social Security for 90 percent or more of their family income.
To demonstrate why Social Security is such a vital source of retirement income, about half of the workforce has no employer-provided retirement plan. More than one in three working households age 21 to 64 has no individual savings set aside for retirement and 44% of people who are closer to retirement -- ages 55-64 -- have no retirement savings accounts. Even those households age 50 to 59 with retirement savings do not have enough; over 60 percent have less than $100,000.
Social Security plays a pivotal role in promoting economic stability for individuals and communities by providing a steady stream of income to retirees, who spend it on the necessities of daily life, contributing $1.4 trillion a year to the US economy ($40.2 billion into Ohio's economy). Additionally, it reduces poverty among vulnerable populations and lessens the burden on other government programs.
Social Security is paid for by dedicated payroll taxes, and the interest those taxes have built up in the Security Trust Funds. Before 2021, Social Security collected more in taxes and interest than it paid out, so it built up a surplus to support the retirement of the “Baby Boomer” generation. Today, that surplus is being used to supplement incoming payroll tax income, but eventually the Trust Funds will face a shortfall in 2035, according to the 2024 forecast from the program’s trustees.
The shortfall is caused by a growing population of retirees and lower birth rates. When that happens, Social Security will still be able to pay 80 percent of benefits, but a cut of 20 percent—an average of over $4,000 a year—would hurt both individuals and communities. However, if our leaders in Washington take action, America’s most reliable foundation of income security will keep delivering on its promise.
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