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Compliance November 18, 2003
Senator Graham Introduces Social Security Reform
November 18, 2003 (PLANSPONSOR.com)Although a
serious debate over changing the Social Security system is
not expected until after next year's presidential elections,
Senator Lindsey Graham (R - South Carolina) unveiled a
proposal on Tuesday to create investment accounts for
workers, hoping to ensure the issue is part of next year's
election debate.
Reported by Alison Cooke
>Under Graham’s plan, workers under the age of 55 would be permitted to invest 4% of their Social Security taxes in individual accounts, but those 55 and older would remain in the current Social Security system.
>Younger workers would have to option of investing, but those who choose to stay in the existing system would have to pay higher taxes. Although those who invest in the private accounts would receive less in guaranteed benefits, supporters of the proposal say the investment account will more than make up for that loss through higher rates of return.
>However, opponents of private accounts argue they will only increase the financial strains on the Social Security system and cite the recent stock market scandals as reason to support keeping the basic benefit of Social Security intact.
>The current Social Security system faces increasing financial strains in the next decade, with the retirement of the baby boom generation. By 2018, the retirement system will pay out more than it collects in taxes and by the fund will be exhausted by 2042 if benefits are not reduced or taxes are not increased to maintain the current levels of funding.
>President George W. Bush has shown support for plans giving workers individual accounts in which they could invest a portion of their Social Security taxes in stocks and bonds.