Posted on: Thursday, February 3, 2005

ISLAND VOICES

By Marie Smith

Social Security reform is at the top of AARP's national agenda.

I've spent the past year participating in Social Security forums across the country, helping people understand the need to shore up Social Security's solvency and discussing ways to strengthen America's most successful domestic program. But it was time to come back home to Hawai'i to spend a week with our members and our Advocacy Hui — a committed group of grass-roots volunteers — to make sure that our kama'aina understand that we have an obligation to current and future generations.

Social Security needs to be strengthened now for our children and grandchildren, but the solution should not be worse than the problem.

From Hilo to Honolulu, I talked about that problem — in community forums, to Rotary Clubs, with retiree, union and other community leaders, to elected officials and to the press. One thing was clear: People are concerned and confused about the rhetoric coming from Washington, D.C.

What's even more clear is that AARP needs to take the lead in mobilizing our communities across the United States to ensure that any proposed change keeps Social Security strong for today's retirees and for future generations.

Our people in Hawai'i need the peace of mind that comes from knowing that Social Security will be there for them when they retire. But there is a right way and a wrong way to approach this.

The wrong way is to take money out of Social Security payroll taxes for private investment accounts, as President Bush suggested in last night's State of the Union address.

Private accounts that drain money out of Social Security would cut guaranteed benefits, while passing the bill on to future generations. Private accounts carved out of Social Security are risky, expensive and completely unnecessary. Most people already realize this. Our research shows that 70 percent of adults 30 and older believe that Social Security should be protected as a guaranteed benefit and should not be privatized.

Private accounts are a gamble we do not and should not have to take. The whole point of Social Security is to provide a predictable, guaranteed, stable source of retirement income; but private accounts pose a threat to that certainty. There are other places in retirement planning for some risk — 401(k) plans and IRAs, for example — but Social Security isn't one of them.

Despite what you may have heard, Social Security is not in a crisis, nor is it in danger of going broke. However, it is quite true that some changes are needed now that more people are living longer. By making sensible changes now, we can honor our obligations to all generations.

A radical overhaul is not what we need. One option we should explore is moving the income cap from $90,000 to $140,000, which would lower the projected shortfall by some 43 percent. Another option is diversifying trust fund investments to get a higher return, which could fix about 15 percent of the problem.

Together, these two options address well over half the projected shortfall and strengthen Social Security for the long run. And there are many other options for change that could do the rest of the job, affecting both revenues and future benefit levels. We have found that most Americans prefer a balanced approach that widely spreads the impact of changes and preserves the current system.

If absolutely nothing is done, by 2042, when the first shortfall hits, benefits could still be paid at about 70 percent of current benefit levels. That's not good enough for future retirees, and it doesn't measure up to Social Security's promise to America.

As people begin to understand that the problems facing Social Security, though significant, are quite manageable, and that the consequences of carving private accounts out of Social Security are not worth the risk, they overwhelmingly support making modest rather than drastic changes to the program. And they support making those modest changes sooner rather than later.

AARP is not against private saving and investing for retirement. We have long championed improvements in private savings vehicles like 401(k) plans and IRAs. But for a secure retirement, savings through other investments must be in addition to Social Security, and not at the program's expense.

Social Security was never meant to be our sole source of retirement income, but our people in Hawai'i should be able to count on it being there. Let's not shake that confidence. Let's strengthen Social Security for today and tomorrow.

Marie Smith, from Kahakuloa, Maui, is national president of the AARP. She wrote this article for The Advertiser.