Daring To Touch the Third Rail -- Social Security

Findings from the 1996 Retirement Confidence Survey

According to the 1996 Retirement Confidence Survey, workers and retirees both appear pessimistic regarding Social Security, but workers are much more so.

• Thirty-eight percent of retirees report Social Security as their most important income source and an additional 26 percent consider it a major source. By contrast, 23 percent of workers expect Social Security not to be a source of income and an additional 50 percent expect it to be a minor source.
• Seventy-nine percent of workers are not confident that the Social Security system will continue to provide benefits of equal value to benefits provided today compared with 48 percent of retirees who feel the same way.

Somewhat surprisingly, both workers and retirees share many of the same opinions regarding reform of the system. Any type of benefit cut is opposed by the majority of both groups.

• Seventy-eight percent of workers and 69 percent of retirees oppose cutting future benefit payments for all future recipients
• About 60 percent of each group oppose reducing the level of the automatic cost of living increases that occur with inflation.
• Seventy-two percent of workers and 55 percent of retirees oppose raising the normal retirement age for collecting full benefits to age 70.
• Both groups do favor cutting benefits for retirees with higher incomes.
• Among retirees, 67 percent favor fully taxing benefit payments of retirees with incomes over $50,000 and 56 percent favor cutting future benefit payments for retirees with incomes over $50,000.
• Among workers, such proposals are favored by 60 percent and 63 percent, respectively.

Workers and retirees have differing opinions regarding more dramatic changes to the system.

• Sixty-nine percent of workers, compared with 50 percent of retirees, favor investing some of the Social Security Trust Fund in the private sector stock market.
• When asked about partially privatizing the system by having some fraction of payroll taxes reallocated to individual IRA-like accounts, 59 percent of Americans favor, while 36 percent oppose it. (22 percent of workers strongly favor and 42 percent somewhat favor such change even given the possibility of lower total benefit levels. By contrast, 26 percent of retirees strongly oppose and 23 percent somewhat oppose such privatization. 40 percent of retirees favor it, although only eight percent are "strongly in favor.")