- Q: Can I count on Social Security for all of my retirement income?
A: The SSA says no. “Social Security was never meant to be the sole source of income in retirement. It is often said that a comfortable retirement is based on a "three-legged stool" of Social Security, pensions and savings. American workers should be saving for their retirement on a personal basis and through employer-sponsored or other retirement plans.”
Q: Does Social Security have dedicated assets invested for my retirement?
A: The SSA describes the system as “pay-as-you-go,” which means that today's taxpayers are paying for the benefits of today's retirees. Any money not needed to pay today's benefits is invested in special-issue Treasury bonds.
Q: Is there a Social Security trust fund?
A: Yes, but it funds only a portion of Social Security expenses. According to the SSA, Social Security currently collects more in taxes than it pays in benefits. The excess is borrowed by the U.S. Treasury, which issues special-issue Treasury bonds back to Social Security and interest is collected on these bonds. Social Security is still a "pay-as-you-go" system, however, because the interest earned is a small percent of the benefit obligations.
Q:Will Social Security be replaced by a private sector retirement plan ("privatization")?
A: The SSA says there are no credible plans to replace Social Security as the foundation for the retirement of American workers.
Q: Is it true that some reform plans require larger transfers from general revenues to fund personal Social Security savings accounts?
A: Yes. Many of the plans require significant transfers from general revenues. These transfers generally range from less than $1 trillion to more than $2 trillion, in today's dollars. The SSA also says that if no changes are made, revenue transfers totaling $3.7 trillion, in today's present-value dollars, would be needed to pay currently scheduled benefits over the next 75 years.
Q: If Social Security's financial problem is so long term (trust fund exhaustion in 2042), why do we need to fix it now?
A: The sooner this problem is addressed, the smaller the changes need to be. The independent, bipartisan Social Security Advisory Board has said: "As time goes by, the size of the Social Security problem grows, and the choices available to fix it become more limited." By addressing the problem now, today's younger workers will have better assurance of Social Security benefits when they retire.
Q: Social Security's future challenges are caused by our aging population. Is this a problem in other countries?
A: Yes. Most countries in Europe, as well as Japan, have even more serious challenges than the United States. Even some developing countries are beginning to address the challenges of an aging population.
Q: What are other countries doing about this problem?
A: Many of these countries have started to prefund their social security plans. More than 20 countries, including Great Britain, Australia and Sweden, have established their own versions of personal accounts.
