As regards Medicare, 67 percent of Americans are not confident that the system will continue to provide benefits of equal only some people af facing today’ Second, two-thirds of the public believe that people now r s Social Security system. By 1995, 82 per fected by reform. Five percent believed that Social Security benefits should be reduced for ever TESTIMONY cent agreed or str eceiving Social Security r ongly agreed with the statement that working eally need the assistance it provides. yone, TESTIMONY SUMMARY Chart 5 Chart 3 value to the benefits received by retirees today (chart 3). In fact, 46 percent of workers do not believe that the Medicare Americans are beginning to lose faith concer but 45 percent believed that benefits should be reduced mor ning whether Social Security benefits will be available when they r e for higher income people than for lower income people. etire If Forced to Chose, Americans’ Preference for Social Security Reform Americans’ Confidence in Social Security and Medicare program will still be providing health insurance when they retire (chart 6). Women are more likely to feel this way than T-107 (char Another 40 per Mr Thir . Chair d, over 80 percent of the public has lost some faith in the futur t 1).man and members of the committee: I am Dallas L. Salisbur cent thought benefits should stay the same, and 4 per e of the program. This number has risen over time as cent thought the benefits should be eliminated. y, President of the Employee Benefit Research Social Security, UFOs, and Aliens men (51 percent, compared with 41 percent). Sixty-four percent of generation X’ers feel this way, compared with Institute (EBRI) and Chair media and public attention has focused on the pr man of the American Savings Education Council (ASEC), both located in W ogram. ashington, DC. I 67% 70 EBRI recently completed a new survey with Matthew Greenwald and Associates that looks at Social Security, UFOs, and aliens. 64% 64% 63% 63% 55 percent of late boomers, 42 percent of early boomers, and 21 percent of pre-boomers. This may help explain why take full r Is the cur Expected Retur r esponsibility for my statement today ent Social Security system a good program for today’ ns , and my thoughts should not be attributed to the or s younger workers? Only one-third of respondents in 1995 ganizations for which I Good Understanding of How the Social 21% 41% 23% 13% 58% 36 percent of workers are not confident that they will have enough money to take car 57% e of medical expenses when they In the Mar work. Four either agreed or str th, in ter ch 1995 sur ms of refor ongly agreed that it is, while nearly one-half (47 per vey m, over 63 per , 60 percent of respondents suppor cent of workers and retirees favor payroll tax incr ted the fact that a par cent) disagr t of ever eed or disagr eases over benefit reductions, y working person’ eed strongly that this is a s income goes 60 Security System Works EBRI First, 58 percent of the public believes that they will receive some benefits from Social Security. This ranges from 83 percent of those retire. good program for today’ to suppor including 57 per t the Social Security program, which is the basic pr cent of generation X’ers and 67 per s younger workers. cent of women. emise of a social insurance program. However, 17 percent of Very Confident about to retire down to 44 percent of those younger than the baby boomers. This is consistent with a 1995 Luntz survey of generation EMPLOYEE Social Security Will Continue to Provide 50 individuals were opposed to this arrangement. Although a majority believe that ever Our Survey Work yone should pay into Social Security, X. 21% 7% 36% 32% Benefits of Equal Value to Those BENEFIT Somewhat Confident Refor some believe that not ever Fifth, generation X’ers look to Social Security as a secondar m Proposals yone should receive benefits from the program. Thirty-two per y source of retirement income, with their own savings and cent agreed or strongly agreed Received by Retirees Today 39% 38% RESEARCH Increase payroll taxes on workers Increase Payroll Taxes on Workers 40 Second, we asked, "Do you believe that living beings from other planets have piloted space craft to or near earth, which have been seen that retirees with ear EBRI began doing public opinion r continued work as primar Several of the reform pr nings over $100,000 should not get Social Security oposals put for y sources. This r esearch on Social Security in 1990. This r th today advocate contributions to individual r epresents a substantial change from the past, but given the r , even if they paid into the system. However esearch has been conducted by two dif etirement accounts. In 1991, when elatively small , nearly ferent 33% Not Too Confident 32% INSTITUTE ® 31% by human beings?" 17% 33% or asked if Social Security taxes, or a por benefits paid by Social Security one-half (47 per ganizations in dif Good Understanding of How the cent) either disagreed or str ferent years: the Gallup Organization from 1990 to 1996, and Matthew Gr 29% , it says that the young are mor tion of these taxes, should go to individual r ongly disagreed with the pr e realistic about what it will take to have an adequate income evious statement. 27% etirement accounts in the worker’ 19% eenwald and Associates with s own Decrease Benefit Levels for Retirees Decrease benefit levels for retirees 27% 30 • 30 percent said yes Medicare System Works Not At All Confident in retirement. name, or if the system should remain as it is, 61 per an annual Retirement Confidence Survey (RCS) from 1990 to 1997. These sur cent thought the money should go to individual accounts, while veys have explored a wide range of eco- Chart 1 • 60 percent said no nomic security topics. In 1998, EBRI will initiate an annual Health Confidence Sur 32 percent believed the system should stay as it is. The Mar Sixty percent of those sur Percent veyed in 1995 expected to r age of Respondents Who A eceive less money from Social Security than they contributed. ch 1995 sur greed or S vey found that 53 per trongly A vey.greed, cent agreed or strongly 20 Medicare Will Continue to Provide March 1995 23% 37% 30% 5% Sixth, the public does not have a good understanding of the Social Security pr Interestingly agreed that most people could make more money by investing their retir , age differences existed for this question. Among those ages 18–34 and 35–54, 72 per ement funds in the private sector than they could ogram. Asked what tr cent and 67 per ust fund exhaustion cent, Benefits of Equal Value to Those Third, because of the attention given to the 1995 Luntz survey for Third Millenium that was publicized as comparing faith in Social Received by Retirees Today r I have made extensive material available to the Committee, which has been submitted as part of the full statement. This meant to them: from Social Security espectively, expected to contribute mor . This has been a hot topic r e money than they would receive from Social Security ecently, with regard to individuals’ ability to invest wisely and at an . In comparison, 34 percent 10 Security to belief in UFOs, we asked the public: "Which one comes closest to your definition of UFO?" appr mor of those ages 55 and older expected to r ning, I want to highlight findings that relate to the debate over Social Security r • opriate risk level. These concer 68 percent said the system will have fewer assets and will have to pay out benefits at a lower level, ns translate into a concer eceive less money than they contributed. n for overall retirement income adequacy eform. . • 77 percent said an “object in the sky that cannot be identified,” and 0 10 20 30 40 50 60 70 80 90 100 Retired Americans are overly interested 40% • 019 percent said a “spacecraft that is controlled by an alien.” • 42 percent either said the system would be completely br in expanding their Social Security Benefits oke and unable to pay any benefits (30 percent) or did Percentage Total Pre- Older Younger Generation Males Females Source: 1997 Retirement Confidence Survey. Social Security The idea of a voluntar In general, Americans believe Social Security to be a good pr not know (12 per , UFOs, and Aliens y Social Security system has also arisen in the r cent), and ogram and, in 1995, 67 per eform proposals. In 1990 and 1991, among sur cent of survey respondents vey You expect to get less money out of Social 60% Boomers Boomers Boomers X Fourth, we asked people, "Which do you have greater confidence in?": Security than what you or your spouse put in agreed or str EBRI r respondents, 45 percent and 50 per • ecently completed a new sur 48 percent among generation X’ers thought ther ongly agreed that most people r vey with Matthew Gr cent, respectively eceiving Social Security r , were in favor of voluntar eenwald and Associates that looks at Social Security e would be no money to pay any benefits, compar eally need the assistance it provides. Most people y participation. While some advocates of , UFOs, and ed with 18 • 71 percent said "receiving Social Security benefits after retirement," and aliens. r are now awar eform favor a voluntar percent of pre-boomers. e of the upcoming issues facing the pr y program, this idea has raised concer ogram and ar n among others r e conscious of the need for some type of r egarding the adequacy of individuals’ 67% eform. Most people now receiving Social • Source: 1997 Retirement Confidence Survey. 26 percent said that "alien life from outer space exists." Testimony of Dallas L. Salisbury Security really need the assistance provided incomes in retirement. W President, Employee Benefit Research Institute (EBRI) orking Americans are beginning to lose This exceedingly low level of accurate understanding may help explain why the young have such low confidence in First, 58 per Social Security Finances cent of the public believes that they will receive some benefits from Social Security. This ranges from 83 82% For generation X’ers, these responses were 63 percent and 33 percent. faith in whether Social Security benefits will be percent of those about to r It is apparent that many Americans do not understand the debate over the Social Security’ When respondents wer receiving any Social Security benefits. At the same time, it underlines the need for public of e asked in the 1991 sur etire down to 44 per vey if they thought higher taxes would be r cent of those younger than the baby boomers. This is consistent with a equir s long-ter ficials to under ed in order for Social m financial condition. take a cam- Chairman, available when the American Savings Education Council (ASEC) y retire The Gallup or paign to assure that the public has the facts on Social Security Security benefits to be paid in the next centur 1995 Luntz sur Thirty-six per ganization has under cent repor vey of generation X. ted in the RCS that they are not confident that they have a good understanding of how the Social taken surveys since the 1950s that have found that a consistent 40 plus per y, 73 percent responded af . firmatively. Forty-two percent of individuals cent of the population 0 1020 3040 5060 7080 90 thinks that UFOs exist. The 1995 Luntz survey found that 46 percent of those ages 18–34 believed that ther Percentage e were UFOs. Separate from Security system works (char surveyed in 1995 disagreed or strongly disagreed with the statement that taxes will have to be raised dramatically to pay t 3). While this number is at its lowest point since the question was first asked in 1992, it is still Before that question, Luntz found that 63 percent (+/- 4.4 percent) of those ages 18–34 “did not think Social Security will still exist by the time Conclusion Second, we asked, "Do you believe that living beings fr for Social Security benefits in the futur only slightly below the 38 percent figure. In comparison, one-thir e reported in 1992. Respondents wer om other planets have piloted space craft to or near earth, which Chart 4 d agreed or str e asked what they believe the ter ongly agreed with the preceding state- m “trust fund Source: Employee Benefit Research Institute/The Gallup Organization, Inc., “Public Attitudes on Social Security, 1995,” EBRI Report G-62 you retire.” Fifty-six percent (+/- 4.4 percent) favored being allowed to put part of their payroll taxes into an individual retirement The House Ways and Means Subcommittee on Social Security Chart 6 (Employee Benefit Research Institute Meaning of “Trust Fund Exhaustion” to Americans , 1995). ment. A full review of public opinion on Social Security underlines workers’ and r have been seen by human beings?" exhaustion” means and were given two choices—(1) the system will be completely br etirees’ hope that the program will continue oke and unable to pay any benefits account (IRA) while taking a lower Social Security benefit. Seventy per Do Workers Believe Medicare Will Be There When They Retire? cent opposed raising the retirement age to 70; 51 percent to exist and the fact that they do not have a good understanding of the pr or (2) the system will have fewer assets and will have to pay out benefits at a r • 30 percent said yes ogram. This suggests that the first step for educed level. Thirty percent incorrectly favored means testing the benefits; 51 percent favored taxing 100 percent of the benefits paid to upper middle income taxpayers. policymakers is to educate the public on this “pay-as-you-go pr Contrar believe that it means the system will be completely br • y to the notion that individuals do not welcome immediate change, in the Mar 60 percent said no oke and unable to pay any benefits (in addition, 12 percent r ogram,” and then move to a discussion of r ch 1995 survey, Americans indi- eform. Today e- , 70 66% Hearing on 66% 64% System Will Be Broke the public does not have a clear enough understanding of the pr cated a prefer sponded that they do not know) (char 70 ence for some immediate tax increases in order to lessen the tax burden on future workers (62 per t 4). The younger the individual, the mor ogram to make infor e likely this response. Nearly one-half med judgments on reform alter cent in na- 61% The Public and Social Security “The Future of Social Security for This Generation and the Next” 60% and Unable to Pay 57% Thir tives. favor) (char (48 percent) of generation X’ers believe tr d, because of the attention given to the 1995 Luntz sur t 2). Interviewees were informed that, in order to maintain pr ust fund exhaustion means system bankr vey for Third Millenium that was publicized as comparing faith esent levels of Social Security benefits for baby uptcy, compared with 18 percent of First, our surveys have consistently found that the public views Social Security as one of the most important programs maintained by the 60 55% 55% Any Benefits 60 51% 53% boomers, the Social Security payr in Social Security to belief in UFOs, we asked the public: "Which one comes closest to your definition of UFO?" pre-boomers. This is not surprising, given that 52 per nation—68 percent view it as second only to Medicar oll tax would have to increase appr e. cent of generation X’ers are not confident in their understanding of oximately 27 percent to 33 percent for both employ- 49% 49% System Will Have Believe Medicare Will 46% 44% 48% ers and employees by 2030. T how the system works, compar •50 77 percent said an “object in the sky that cannot be identified,” and wenty-eight percent said they prefer ed with 23 percent of pre-boomers. Public Attitudes on Social Security Refor red to postpone taxes until after 2010. m Fewer Assets and 42% 50 Be Providing Benefits 41% 45% Second, two-thirds of the public believe that people now receiving Social Security really need the assistance it provides. Benefits Will Need 38% at Their Retirement • 19 percent said a “spacecraft that is controlled by an alien.” 36% 40 to Be Reduced 39% Sur Changes in the Level of Benefits Received Sixty-eight per veys conducted by the Employee Benefit Resear cent of Americans are not confident that Social Security will continue to pr ch Institute and the Gallup Organization, Inc. from Febr ovide benefits of equal value to uary 1990 to Chart 2 40 27% Do Not Believe Third, over 80 percent of the public has lost some faith in the future of the program. This number has risen over time as media and 1 Don’t Know 33% T March 1995 examined public attitudes on Social Security Fourth, we asked people, "Which do you have gr the benefits r wenty-four percent of sur 30 eceived by retir veyed individuals in April 1994 expected the level of Social Security benefits to incr ees today (chart 3). This figure is down from its peak of 73 per eater confidence in?": . Time trends and direct comparison among the sur cent in 1995, but is still higher veys ar ease in the e Payroll Tax Increase Preferences, March 1995 Medicare Will Be 30% 21% public attention has focused on the program. Providing Benefits at future, while 40 per than the 65 per problematic due to changes in question wor • 71 percent said "receiving Social Security benefits after r cent first repor cent expected benefits to decrease and 31 per ted in 1992. Among workers, only 12 per ding or response options. However etirement," and cent believed they would be eliminated. Benefits would cent expect it to be their most impor , the survey results do provide some tant source of 27% 27% 30 20 Their Retirement r r insights into attitudes toward Social Security and how these attitudes have shifted over the years. emain the same, according to 4 per etirement income, while 22 per • 26 percent said that "alien life fr cent do not expect it to be an income sour cent of respondents. A similar question was asked in Mar om outer space exists." ce at all in retirement. ch 1995; however, direct Fourth, in terms of reform, over 63 per 22% cent of workers and retirees favor payroll tax increases over benefit reductions, including 57 Washington, D.C. 2 comparison of the responses is not possible because the questions wer 10 e phrased differently and the response options percent of generation X’ers and 67 per 18% cent of women. 20 October 23, 1997 Implement some tax 14% For generation X’ers, these r dif The Cur fered as well. In March 1995, 21 per rOther Sur ent System veys Find: The Public Agenda/Fidelity study found that 22 per esponses were 63 per cent of respondents expected that benefits would be r cent and 33 percent. cent expect to get nothing fr educed for all people, om Social Security. 12% Postpone taxes until increases now 62% 11% 0 Fifth, generation X’ers look to Social Security as a secondary source of retirement income, with their own savings and continued work whereas 25 per In the early 1990s, Americans wer cent expected they would be r e evenly split in their beliefs about the likelihood that the Social Security system will be educed at a greater rate for higher income people than for lower income after 2010 28% Total Pre-Boomers Early Boomers Late Boomers Generation X Males Females 7% 7% 10 as primary sources. This represents a substantial change from the past, but given the relatively small benefits paid by Social 5% Security, it The Gallup or people. Additionally Assuming that adjustments or changes must be made to the Social Security system to ensur able to pay benefits to them when they r ganization has undertaken sur , 26 percent thought the benefits would stay the same, and one-fifth thought they would be elimi- etire; in 1990 and 1991, 49 percent believed they would r veys since the 1950s that have found that a consistent 40 plus per e its financial viability in the eceive benefits. However cent of the , says that the young are more realistic about what it will take to have an adequate income in retirement. Source: 1997 Retirement Confidence Survey. nated. population thinks that UFOs exist. The 1995 Luntz sur future, RCS sur in 1990, 92 percent of sur vey respondents were for vey respondents did not believe that the Social Security benefits alone would allow them to meet ced to express a preference between incr vey found that 46 percent of those ages 18–34 believed that there eased payroll taxes on workers or 0 were UFOs. Separate fr r all of their financial needs during retir educed benefit levels for retir om that question, Luntz found that 63 per ees. When for ement. In r ced to choose, 63 per ecent years, most Americans have become aware of the financing issues cent (+/- 4.4 per cent chose increased payroll taxes and 32 per cent) of those ages 18–34 “did not cent chose Total Pre-Boomers Early Boomers Late Boomers Generation X Males Females Sixth, the public does not have a good understanding of the Social Security program. Asked what trust fund exhaustion meant to them: Inter think Social Security will still exist by the time you r decreased benefit levels (char estingly, when individuals were asked what they believed t 5). The majority of each generation chose incr etire.” Fifty-six per should happen to the level of benefits (as opposed to what cent (+/- 4.4 per eased payroll taxes, although generation cent) favored being allowed to put • 68 percent said the system will have fewer assets and will have to pay out benefits at a lower level, Source: 1997 Retirement Confidence Survey. part of their payroll taxes into an individual r X’ers wer they expect e the least likely to favor it (57 per to happen), their responses were quite dif cent). Sixty-seven percent of women chose incr etirement account (IRA) while taking a lower Social Security benefit. ferent. Not surprisingly, a greater percentage would prefer to see eased payroll taxes, compared • 42 percent either said the system would be completely broke and unable to pay any benefits (30 percent) or did Don’t know/ Seventy percent opposed raising the r with 58 percent of men. Among those favoring benefit cuts, ther not know (12 percent), and etirement age to 70; 51 pere was a fairly even split when forced to express a pr cent favored means testing the benefits; 51 percent efer- refused 8% 1 See Employee Benefit Research Institute/The Gallup Organization, Inc., “Public Attitudes on Social Security, 1990,” • 48 percent among generation X’ers thought there would be no money to pay any benefits, compared with 18 favor ence for how to make the cut. Thirty-three per ed taxing 100 percent of the benefits paid to upper middle income taxpayers. cent favored raising the age for retirement with full benefits to 70, EBRI Report G-7 (Washington, DC: Employee Benefit Research Institute, 1990); “Public Attitudes on Social Security The views expressed in this statement are solely those of the author and should not be attributed to the percent of pre-boomers. Source: Employee Benefit Research Institute/The Gallup Organization, Inc., “Public Attitudes on Social Security, 37 percent favored decreasing cost-of-living-adjustments (COLAs) that occur with inflation, and 26 percent favored 2 Benefits, 1991,” EBRI Report G-23 (Washington, DC: Employee Benefit Research Institute, 1991); “Public Attitudes on Employee Benefit Research Institute, or the EBRI Education and Research Fund, its officers, trustees, The April 1994 question read, “Do you expect the level of Social Security benefits to increase, decrease, or be elimi- 1995,” EBRI Report G-62 (Employee Benefit Research Institute, 1995). The Public and Social Security cutting benefits for all recipients. This exceedingly low level of accurate understanding may help explain why the young have such low confidence in r Social Security, Part I,” EBRI Report G-56 (Washington, DC: Employee Benefit Research Institute, 1993); “Public Attitudes eceiving any Social nated in the future?” while the Mar sponsors, or other staff, or to the EBRI-ERF ch 1995 question r American Savings Education Council. The Employee Benefit ead, “In the future, do you expect that Social Security benefits will: First, our surveys have consistently found that the public views Social Security as one of the most important programs Security benefits. At the same time, it underlines the need for public officials to undertake a campaign to assure that the public has the on Social Security, Part II,” EBRI Report G-57 (Washington, DC: Employee Benefit Research Institute, 1994); and “Public (a) be reduced for all people, (b) be reduced at a gr Research Institute is a nonprofit, nonpartisan, public policy research organization which does not lobby or eater rate for high income people than for low income people, (c) maintained by the nation—68 percent view it as second only to Medicare. facts on Social Security. Attitudes on Social Security, 1995,” EBRI Report G-62 (Washington, DC: Employee Benefit Research Institute, 1995). stay the same, (d) be eliminated, or (e) don’ take positions on legislative proposals. t know.” –1– –4– –6– –3– –5– –2– Percentage Percentage Percentage