Details on the current state of Social Security and proposals being considered in Washington. Facts, Figures, Analytics.

2. Facts &
Challenges
Social Security was signed into law in 1935,
to ensure that seniors would have a steady
and guaranteed source of income when they
retired. The first payments were made in
1937 – to just 53,236 Americans. Now a little
over 58 million Americans receive Social
Security benefits. Let’s take a closer look at
what makes this program vital to so many
people and to our economy.
http://www.ssa.gov/cgi-bin/currentpay.cgi

3. • You need to work at least 10
years to become eligible for
retirement benefits
• You earn Social Security credits
when you work in a job and pay
Social Security taxes
• Only legal residents can collect
Social Security benefits.
Who is Eligible for Social Security?
Social Security is an Earned Benefit

4. Retired
Workers
65%
Disabled
Workers
16%
Widows &
Parents
7%
Children
8%
Spouses
4%
Who Receives Social Security?
In 2013,
58 million
Americans
received
Social Security
benefits.

5. • Provides more than half of
family income for almost 1/2
of all seniors
• Provides almost all family
income for about 1/4 of
seniors
• 44% of Illinoisans 65+ are
kept out of poverty by Social
Security
A Vital Source of Income for Seniors
Keeps 15 Million Seniors Out of Poverty

6. Critical for the Economy
Social Security Benefits Support Economy & Jobs
9.2 Million
Jobs Supported
$1.4 Trillion
Added to the Economy

7. 10
15
20
Social Security Challenges
65-year-old could expect to live nearly 20 more years today

8. 0
5
10
15
20
25
30
Social Security Challenges
Birth rate fell from about 25 per 1,000 people to under 13

9. 0
1
2
3
4
5
6
7
8
9
Social Security Challenges
Number of workers per beneficiary will decline to 2.1 in 2033

10. 5 Proposals
Being Talked
About in
Washington

11. Proposal on the Table in Washington:
Raise the Full Retirement Age (FRA)
• Has been increasing since
2000
• Currently 66 & will be 67 for
those born 1960 and later
Currently:
66-67
• Increase by 2 months each
year from 2023 - 2028
• Estimated to fill 16% of gap
Proposal:
68
• Increase by 2 months each
year from 2023-2040
• Estimated to fill 44% of gap
Proposal:
70

12. Raise the Full Retirement Age:
Argument For (Romina Boccia)
 All Americans are living longer but Social
Security has not kept pace
 Between 2000 and 2010, life expectancy
increased by 1.7 year for white and African-
American men; by 1.8 years for African
American Women; and 1.2 years for white
women
 Increasing the FRA slightly and predictably is a
fair and commonsense approach to improve
Social Security’s finances

13. Raise the Full Retirement Age:
Argument Against (Virginia Reno)
 Increasing the FRA is an across the board
benefit cut
 The FRA is already increasing to age 67 for
people born in 1960 or later
 Most gains in life expectancy over last 30 years
have gone to higher earners
 A higher FRA would greatly disadvantage low-
paid and minority workers who, on average,
have seen little or no gain in life expectancy

14. Proposal on the Table in Washington:
Recalculate the COLA
Chained Consumer
Price Index
• Aims to account for
change in consumer
buying habits when
prices change
• Predict annual COLA
on average 0.3%
points lower under
this
• Estimated to fill 20%
of gap
Elderly Index
• Aims to reflect
spending patterns of
older Americans
(including health care)
• Predict annual COLA
on average 0.2 higher
under this
• Estimated to increase
gap by 14%

15.  Social Security should use the most accurate
and up-to-date index to protect benefits from
being eroded by inflation
 Benefits would continue to rise with inflation
under the chained CPI
 CPI-E (elderly index) should not be used
because 1) it is less accurate, 2) people of all
ages receive benefits, and 3) it would worsen
Social Security’s financial problems
Recalculate the COLA: Argument For
Chained CPI (Romina Boccia)

16.  An elderly index (CPI-E) provides a more accurate
measure of inflation for older people because it
reflects their buying patterns
 A Chained CPI is not more accurate for older
Americans because it doesn’t fully account for their
higher spending on health care
 The benefit cut of a chained CPI would compound
over time causing the oldest beneficiaries, who are
heavily reliant on Social Security, to experience the
biggest cuts
Recalculate the COLA: Argument For
Elderly CPI (Virginia Reno)

17. Proposal on the Table in Washington:
Increase the Payroll Tax Cap
Cap covers
about 83% of
total earnings in
nation
Payroll tax
currently applies
to annual
earnings up to
$117,000
Any wages
above $117,000
go untaxed
83% Proposal to
raise cap to
cover 90% of
total earnings in
nation
Would apply to
annual earnings
up to about
$247,500 in 2015
Estimated to fill
28% of funding
gap
90%

18.  Restores the intent of Congress when it set
the tax cap to include 90% of covered
earnings in 1977
 Only 6% of workers affected
 Would make Social Security financing more
fair by requiring top earners to pay more into
Social Security
Increase the Payroll Tax Cap:
Argument For (Virginia Reno)

19.  A hefty tax increase that will hit middle
income taxpayers and hurt the self-employed
and certain small business owners
 Only delays Social Security’s cash-flow
problems by eight years while allowing
Congress to spend more right away
 The historical average covers 83 percent of
earnings—90 percent is an anomaly that only
occurred once in 1983
Increase the Payroll Tax Cap:
Argument Against (Romina Boccia)

20. Proposal on the Table in Washington:
Eliminate the Payroll Tax Cap
Cap covers
about 83% of
total earnings in
nation
Payroll tax
currently applies
to annual
earnings up to
$117,000
Any wages
above $117,000
go untaxed
83%
Proposal to
eliminate the
cap
The payroll tax
rate would apply
to ALL earnings
Estimated to fill
70% of funding
gap
100%

21.  Would equalize the tax rate so all workers
pay the same percentage (6.2%) on their
earnings.
 Only 6 percent of workers affected
 Would eliminate much (70%) of the financing
gap
 Improves fairness and would reduce income
inequality
Eliminate the Payroll Tax Cap:
Argument For (Virginia Reno)

22.  Would either cause huge checks for the very wealthy
or break the link between earnings and benefits.
 Annual benefit payments for millionaires could reach
over $150,000
 Marginal tax rates in some states would go to 68
percent—some people would see more than two-
thirds of earned income taxed away
 Congress would spend surpluses immediately,
increasing deficits and the debt for future
generations
Eliminate the Payroll Tax Cap:
Argument Against (Romina Boccia)

23.  Benefit payments are
based on earnings that
were subject to Social
Security payroll taxes.
Proposal on the Table in Washington:
Reduce Benefits for Higher Earners
 Higher Lifetime Earners
• Receive higher benefit payments
• Benefits replace smaller share of past earnings

24. Proposal on the Table in Washington:
Reduce Benefits for Higher Earners
Proposal to reduce benefits for
highest-earning 50%
Gradually
over time by
sliding scale
Up to 28%
benefit
reduction for
maximum
earners
Estimated to
fill 33% of the
gap

25.  A true social insurance program provides a
form of protection to those who contribute to
the program.
 In an era of large budget deficits and high
national debt, working generations can
hardly afford to pay benefits to all retirees
regardless of need.
 Social Security should protect all against
poverty in retirement by focusing benefits on
those who need them the most.
Reduce Benefits for Higher Earners:
Argument For (Romina Boccia)

26.  Cutting benefits for higher earners would actually
cut benefits for the broad middle class
• Highest-earning 25% have average lifetime
earnings as little as $59,000 a year
• Highest-earning 50% have average lifetime
earnings as little as $38,000 a year
 These benefit cuts are not warranted. The
middle class relies heavily on Social
Security. We can afford to preserve and pay for
Social Security
Reduce Benefits for Higher Earners:
Argument Against (Virginia Reno)

27. Which Options Would You Support to Strengthen
Social Security?
https://twtpoll.com/3x837ajgpkr9jl2
POLL QUESTION

28. AARP is
Fighting for
a Separate
Debate

29. Payroll
Taxes
84%
Interest
13%
Taxation of
Benefits
3%
29
Social Security
Separate from the Budget
Social Security is
a self-financed
program, not a
piggy bank for
deficit reduction!

30. 2015 2025 2033* 2087
100% 100%
77%
72%
% of Benefits Paid30
Social Security
Can Pay Full Benefits Until 2033

31.  Take Action: Tell your elected officials to
keep Social Security strong for the future!
 Go to action.aarp.org/SocialSecurity to send
President Obama and your members of
Congress a message today!
Make Your Voice Heard