All too often, retired Americans must worry about their financial security. In theory, the three major sources of retirement income for elderly Americans should be Social Security, employer-sponsored pension plans, and private savings. However, many employees work for employers who do not offer a pension or savings plan, such as 401(k)s. In addition, the tax system favors those who already save enough and the growing use of defined contribution plans, such as 401(k)s and IRAs, has led to greater risks in saving for retirement. In this climate, Social Security has become an increasingly important factor in retirement security. Below is a sample of what Americans across the country are saying about their retirement (in)security:
Contra Costa, Calif. – Contra Costa Times
March 13, 2005 – Letter to the Editor
"I am a retired 74-year-old woman and get Social Security benefits, a private pension and payments from 401(k)s. Prior to the dot-com disaster a few years ago, my 401(k) was worth almost $300,000.
"It quickly dropped to half and is slowly, slowly recovering. If it were not for my pension and Social Security, I would be very, very nervous about how I would survive what remains of my life."
Philadelphia, Penn. – Philadelphia Inquirer
March 20, 2005 – Editorial
"Social Security's projected shortfalls are a problem that can be fixed without scrapping the program or its basic, admirable premise. It is not an individual investment plan. It is an intergenerational compact intended to make sure no American has to spend his or her twilight in poverty….
"Here's why you shouldn't mess with Social Security as baseline insurance. Traditional pension plans are disappearing, and some seniors who thought their pensions were secure have seen their plans go bankrupt, such as Bethlehem Steel. More risk isn't what they need."
Shreveport, La. – The Times
March 16, 2005 – Letter to the Editor
"In this time of corporate scandals, lost pensions and stagnant wages, working people need something that is guaranteed and risk-free; that was always the genius of Social Security….
"Social Security does need improvement, but that should mean ensuring benefits, not putting them on the Wall Street roller coaster. There are plenty of opportunities to invest in the stock market. Congress and the president should strengthen Social Security to make sure working people get the benefits we've paid for. We deserve it."
Denver, Colo. – The Denver Post
March 13, 2005 – Perspective
"The retirement benefits offered by Social Security were originally designed as one leg of a three-legged stool that also included a worker's pension and a family's private savings.
"But American families don't save like they used to, and the national savings rate has been declining for the last 35 years. At the same time, American companies as a whole have been cutting back – or in some cases defaulting – on the pension coverage they once offered employees.
"Over the last three decades, the share of private workers covered by a traditional defined-benefit pension plan has dropped by almost half.
"As the other legs of the stool grow more wobbly, Social Security has become more important. Now two-thirds of the elderly in America rely on Social Security for at least half of their income; for 20 percent of American retirees, Social Security is their only income."
Passaic County, N.J. – Herald News
March 16, 2005 – Letter to the Editor
"I myself am a retired firefighter, and I now receive a very generous amount of money every month, plus lifetime medical benefits. I believe it would be easy for me to support Bush's plan, as I do not need Social Security …
"My dad … receives less than $400 a month in pension benefits from his former employers for his 40 years of service. I believe most people in this country are in the same leaky boat he is in, or worse. They need their present Social Security just to survive."
Fresno, Calif. – Fresno Bee
March 11, 2005 – Letter to the Editor
"To pay for my impending retirement, I look at my pension and at Social Security. I'm also blessed with a 401(k) program, but I don't even look at that. If the stock market cooperates, 401(k) will be a bonus, making it possible to re-roof my house some day and to buy one more car, and maybe have something to leave my wife.
"If the stock market doesn't cooperate, I won't starve; but she might.
"Unfortunately, there is a trend against pensions in favor of 401(k)s, President Bush wants to turn Social Security into a sort of 401(k)…
"If jobs paid enough for people to save for the future and if you could depend on the stock market, that would be OK. But neither is true…
"We all need the safety net of Social Security when we retire."
Portland, Ore. – The Oregonian
March 14, 2005 Monday – Editorial
"Too little money goes into the three legs of retirement – Social Security, pensions and private savings – to ensure that many Americans won't end up both old and poor.
"Social Security, despite the current political hubbub, is the most stable of the three legs. The system covers 96 percent of U.S. workers and provides more than half of the retirement income to two-thirds of all retirees.…
"The pension picture is more troubling. Defined-benefit pension plans – the ones that promise a specific monthly check to retirees based on yearly income and number of years worked – provide only about one-fifth of retirement income. The number of companies offering this assured benefit is fast declining. In addition, the companies are underfunding these plans to the astounding level of $450 billion."