Building on Social Security's Success

Publication Date: November 2007

Publisher: Economic Policy Institute

Author(s): Virginia Reno

Research Area: Banking and finance; Economics

Type: Brief

Abstract:

The United States needs a new conversation about how Social Security is part of the solution to the growing economic risks American workers face. The key question for policy makers is: How can we build on the strengths of Social Security--its fiscally responsible design, its universality, progressivity, efficiency, and its effectiveness-to meet the needs of working families in the 21st century?

As employers shift away from traditional pensions to 401(k) plans, workers shoulder more financial risks. Social Security offers employers what they want--freedom from financial risk and fiduciary burdens--and it provides workers with what they need--economic security. Policy makers have an excellent tool at hand to strengthen retirement security. Social Security is well designed, secure, and efficient. With its proven track record, it holds the best prospect for using new money effectively to improve retirement security. Wise policy would first balance Social Security finances without cutting benefits. It would then make benefits more adequate before subsidizing other retirement income tools.