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Will There Be Money Left in Social Security's Stash When You Retire?

Predicted Meltdown of System Demystified by Former Agency Head

By D. Lyn Hunter, Public Affairs
Posted November 10, 1999

American women must get involved in preserving Social Security because they are the most vulnerable if a collapse should happen, says Shirley Chater, former commissioner of the Social Security Administration.

"It's really a women's program because we live so long," said Chater at a gathering in Alumni House Nov. 2. As proof, she shared this staggering statistic: Of the 37,000 people over the age of 100 in the United States, only 5,000 are men.

The program is supposed to be gender-neutral, but because of the way benefits are calculated, women often get short shrift, she said.

"Benefits are based on years of work and the amount of money put into the system through payroll deductions," said Chater. "Traditionally, women work less because of child and elder care and put in less money because they still only earn 70 percent of a man's dollar."

Many have predicted that Social Security will collapse over the next 30 years because there are more people receiving benefits than there are workers contributing to the system. The problem is exacerbated by the huge wave of baby boomers approaching retirement age.

Social Security currently has a $650 billion surplus, but a recent government report projects a rapid depletion of these funds. By the year 2034, it says the program will only be able to pay out 75 percent of benefits.

Based on these projections, many in Congress want to initiate a major overhaul of the program, said Chater. Some have even suggested that Social Security become privatized, an idea heavily supported by Wall Street.

"To privatize means some government body would take a small percentage of every worker's payroll deduction and invest it in the stock market," she said.

These solutions, said Chater, raise a host of disturbing questions, including who decides where the money is going to be invested, what happens if the stock market takes a downturn, and how would such changes affect other areas of the economy.

Chater cautions against any dramatic changes to the current system, such as privatization.

"The problems with Social Security are solvable," said Chater, who received her doctorate from Berkeley. "But we must act soon, and the American people must be involved."

Possible reforms, according to Chater, include raising the retirement age, because people are living longer and healthier lives; revoking the law that allows many local, state and federal government workers to not pay into the system (about five percent use this option); and removing the cap on the amount of income (currently $72,000) that can be taxed for Social Security.

"With some minor tweaking and readjustments," she said, "Social Security should be around for a long time to come."

Chater was president of Texas Women's University when she was tapped to become commissioner of Social Security in 1993. During her tenure, she worked to streamline operations and improve customer service. She left the organization, which employs 65,000 and handles 64 million calls annually, after four years at the helm.



November 10 - 16, 1999 (Volume 28, Number 14)
Copyright 1999, The Regents of the University of California.
Produced and maintained by the
Office of Public Affairs at UC Berkeley.
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