This article was carried on the Knight Ridder newswire, to newspapers across
the country in April, 2001.
Social Security: Safe Harbor in a Stormy Economy
By Diana Zuckerman
This has been a time of stress and uncertainty in America -- workers are being laid off, the stock market is on a roller coaster that mostly goes down, the hostility with China continues, and we're wondering about the arsenic in our water. But we have one thing to be very thankful for: Our Social Security benefits aren't invested in "dot.com" stocks.
For the last three years, there has been a constant refrain to "do something" to save Social Security to keep it secure when the baby boomers retire. And for the last year, George W. Bush and many other politicians on both sides of the aisle have claimed that the remedy for Social Security was for each individual to have his or her own private account, invested in stocks and mutual funds.
Aren't you glad that never happened?
It's one thing for a 25-year old who started his own company to wake up one morning and realize he isn't a millionaire anymore. Few of us will shed a tear when he has to sell his Mercedes convertible and his SUV and find a new job. But what if you -- or your ailing mother -- retired yesterday and discovered today that your very own personal privatized Social Security account is worth half of what it was worth three months ago? And all your planning goes down the tubes as you have to decide whether to sell your stocks when they are worth a fraction of what you paid for them, or try to go back to work to support yourself and hope that your investment recovers so you can retire next year, or the year after.
The truth is, we rarely appreciate what we've got til its gone. Under the current Social Security system, we have security. The money is always there. It never shrinks. If you live to be 100 -- or even longer -- you are guaranteed a check every month. And best of all, the benefits increase every year to keep up with inflation, instead of decreasing if the economy goes sour.
It's no accident that the hottest issue of the election is no longer being discussed. Remember the special commission that President Bush promised to create to study Social Security reform? A single member has yet to be named. And no wonder -- it would be crazy to bring attention to the issue of privatized accounts -- the only requirement Bush specified for the commission -- at a time when the stock market is totally unpredictable.
Millions of retirees who live on their savings will be having a hard time this year if they invested in stocks or mutual funds. Fortunately, their Social Security benefits will be exactly what they were promised. It may not be the biggest return on their investment every year, but when they (or you) really need it, it will be there, and the economists forecast that it will be secure for at least the next 37 years. Which is more than you can say about your other investments.
In the short term, unlike the stock market, Social Security is as strong as it has ever been. And the experts are confident it will be 100-percent secure until 2038. To be cautious, we need to consider changes now to make sure it's secure after that. We should not put that off too long. But, Social Security has been remarkably resilient for the last 60 years, and if we give it a chance, it will be resilient for at least 60 more. What other program -- public or private -- can make that claim?
National Research Center for Women & Families
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