The Changing Nature of the Life Course__________________________________

Source: Matilda White Riley (1988)

Types of Social Structure

Financial Security in Old AgeFinancial Security in Old Age________________________________________________

• What comes to your mind when you think about this topic?

• Your Savings Account?

• Charts about U.S. savings rates?

• Social Security?

FinanFinancial Security in Retirementcial Security in Retirement______________________________________________

Financial Security in Old AgeFinancial Security in Old Age________________________________________________

Social Policies

Older Americans

to address the needs of

The U.SThe U.S. Welfare State. Welfare State______________________________________________

• American Welfare Politics: 1935-2001

• Three (or 4-) legged Stool of Retirement Income

• Social Security Reform

• Pension Terminology

• Q & A

The U.SThe U.S. Welfare State. Welfare State______________________________________________

Source: Edward Berkowitz, America’s Welfare State from Roosevelt to Reagan. Baltimore, MD: Johns Hopkins Press, 1991.

Prior to tPrior to the U.She U.S. Welfare State. Welfare State________________________________________________

The Setting: The Great DepressionThe Setting: The Great Depression

______________________________________________

The The DevelopmentDevelopment of the U.S of the U.S. . Welfare StateWelfare State

________________________________________________

President Franklin D. Roosevelt 1935

The The DevelopmentDevelopment of the U.S of the U.S. . Welfare StateWelfare State

________________________________________________

President Franklin D. Roosevelt signing the Social Security Act on August 14, 1935

We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life,

But we have tried to frame a law which gives some measure of protections to the average citizen and his family against the loss of a job and against poverty-ridden old age.

U.SU.S. Social Welfare Programs. Social Welfare Programs________________________________________________

• Social Insurance (Social Security)

• Social Assistance (Supplementary Security Income, SSI)

Two-tiered System

Two-tiered System

Social Insurance Social Assistance

Social Security Medicare (pays doctors and hospitals)

Administered by the Federal Government Entitlement Programs Age-based not need-based

SSI Medicaid (for nursing home care and medical insurance for the poor and blind)

Administered by the States Varying eligibility and benefit rules Need-based programs

U.S. Retirement PolicyU.S. Retirement Policy__________________________________________

Three-legged stool of Retirement Income

– Social Security– Assets– Pensions – Earnings (For some the three-legged stool

wobbles -so a fourth leg is added)

Pensions, IRAs, etc.Pensions, IRAs, etc.____________________________________________ Public Pensions

– General Public Pension (Social Security) – Public Employee Pensions (federal, state and local

government employees) Job-specific Pensions

Private Pensions Job-related or Union-sponsored Pensions

(teamsters, teachers, etc.) Personal Retirement Plans (IRAs, Keoghs)

Funding of Pension SystemsFunding of Pension Systems__________________________________________________

Pay-as-you-go Partially pre-funded Pre-funded

Pension TerminologyPension Terminology____________________________________________ERISA and PBGCVESTINGPORTABILITYCOLA

Major Changes in the US Major Changes in the US Pension SystemPension System

____________________________________________ Defined Benefit Plans to Defined Contribution Plans

Major Changes in the US Major Changes in the US Pension SystemPension System

____________________________________________

Social Security SystemSocial Security System

__________________________________________

What kind of pension system is the social security system?

Defined Benefit or Defined Contribution?

Pay-as-you-go or Pre-funded?

AchievementAchievements of s of SociSocial Security al Security

Impact of SociImpact of Social Securityal Security ______________________

Who gets SociWho gets Social Security?al Security? ______________________

Who needs SociWho needs Social Security? al Security? ______________________

WWithout ithout SociSocial Security? Poverty%al Security? Poverty% ______________________

The Federal Budget: Income The Federal Budget: Income ______________________

Federal Budget RevenueFederal Budget RevenuePercent

100

80

60

40

20

0

1956 1962 1968 1974 1980 1986 1992 1998 2004

Budget SurplusBudget Surplus

SociSocial Security & the Surplusal Security & the Surplus ______________________

WhatWhat’s ’s thethe problem problem withwith SociSocial Security?al Security?

__________________________

SociSocial Securityal Security ______________________

SociSocial Security Reformal Security Reform Projections do indicate that minor adjustments have to made in order to pay the same benefits to future generations.

However, what kind of adjustments, and who has to pay and who receives the most benefits is a political question.

The doomsday scenarios are political propaganda!

Take a look at countries that already now have a much higher dependency ratio (65+ population to working age group) than we will have in 2020.

Their experience shows that one can manage to provide a good old age for the majority of retired citizens even when this population is larger than 20% - as long as there is the political will to do it.

SociSocial Securityal Security Is more than a regular financial retirement program. It provides

• Inflation-protected benefits for as long as you live

• A higher replacement rate for workers with lower earnings

• Extra benefits for spouses with low lifetime earnings

• Benefits for disabled, widows and survivors.

SociSocial Securityal Security ______________________

The Social Security program has become the most successful anti-poverty program in the history of the United States.

Without Social Security over ½ of all older women would live in poverty.