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Photo: CORBIS |
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Busting the Myths About Social Security
Jessica Sánchez-Jackson, like many people in the United States, thought she knew a lot about Social Security. After attending an AARP-sponsored forum on the topic, she realized that much of what she "knew" was wrong. "I had heard that Social Security was not going to be around, that it is going bankrupt," the 71-year-old retired nutrition educator says. "But it's going to be there for a long, long time." AARP officials have been traveling the country sharing with Hispanics the benefits of Social Security and dispelling the most widespread myths. "Would you believe that there are individuals and organizations claiming that Social Security is a bad deal for Latinos?" AARP Board Member José Maldonado asked participants during a November forum in Albuquerque, New Mexico. "Even worse, many of these people are distorting the facts, trying to scare us into believing that Social Security is going broke."
Social Security will be able to pay full benefits until 2041 without any changes in the program-and pay 70 percent after that, according to federal government projections. That revelation was one of several Sánchez-Jackson took away from the January forum she attended in Phoenix. She also heard confirmation that Social Security is the primary source of retirement income for most older Hispanics, particularly women. "That's one of the things that I knew about Social Security, but I had never heard anybody say it," Sánchez-Jackson said. The majority of older Hispanics rely on Social Security for more than half their income, with more than one out of every three depending on it entirely, according to the Social Security Administration. Sánchez-Jackson had heard about plans to "privatize" Social Security, to "carve out" money from the system and divert it to individual retirement accounts (IRAs), which would fluctuate with the stock market. "I didn't know whether it was a good plan or not," she said. "Now I know. It's not a good idea." It is especially not a good idea for Hispanics, Maldonado said from his Colorado home. AARP contends that investing Social Security funds in private retirement accounts rather than in government-backed securities would sacrifice some of today's inflation-protected, lifetime-guaranteed benefits and jeopardize the current system's finances. Returns in the open market could grow, but they also could shrink. Also, there are no lifetime benefits guarantees or inflation protection.
Older people with additional sources of retirement income, such as pensions and investments, might be able to weather smaller Social Security checks during a stock market downturn. Many retired Hispanics, whose only source of income is Social Security, probably could not. According to the Social Security Administration, the impact on Hispanic women would be even greater since they are less likely to have a pension or other savings. Furthermore, their Social Security checks are usually smaller because they generally had lower salaries and spent less time in the workplace, having taken out time for child rearing and caregiving. While their Social Security checks may be smaller, they do increase with inflation and are guaranteed for life. Moving Social Security funds into private retirement accounts in the private sector would put at risk what little they have and wipe out the promise of an inflation-proof check for life. "The big risk with privatization, especially for women, is that you can outlive your benefits," Maldonado said. "For Latinos, especially, this is not a risk worth taking." Social Security is safe for now, but Gil Gonzales, 74, worries it won't be available for his grandchildren. "The solvency of this program for the future is crucial," said the volunteer director of AARP's Hispanic outreach in Arizona. While the system's future woes are fixable now, the more time lawmakers take to make changes, the more difficult it will be to forestall later problems. Maldonado said. Various proposals exist for keeping Social Security solvent. Maldonado suggests people ask their lawmakers specific questions about what their plans are for Social Security's future. "We need to put politicians on the spot and not get swayed by their semantics; we need to find out exactly what they are meaning," he said. "Then, don't be silent. Let your voice be heard." Now, check out a few facts about Social Security. These links are provided for informational purposes only. AARP does not endorse, and has no control over, or responsibility for, the linked sites or the content, advertisements, materials, products, or services available on or throughout these sites. |
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