Reform the Social Security System and Provide Alternative Savings Vehicles to Ensure Stable Retirement for All Generations of Workers
- The current Social Security system is an income transfer where workers are taxed to pay benefits to retirees and it does not allow funds to be invested similarly in an IRA or 401(k). The system began with a 16 to 1 worker to beneficiary ratio; now there are only 3 workers to each beneficiary. At the current rate the system will go into the red in 2017, and in 2041, it will be completely out of money. Without reform the system will fail and increased payroll taxes will only postpone the problem, not solve it. Congress should also encourage alternative savings vehicles for employees.
- Protect Benefits for Seniors and those Nearing Retirement. Protecting current beneficiary and near-term beneficiaries is necessary. The changes to the system must leave those born before 1950 unaffected.
- Establish Optional Personal Retirement Accounts for Younger Workers. The system must have options for the younger generation, to offer the opportunity to earn higher benefits than the current system can afford, and to build a “nest egg” that they own.
- Put Social Security on a Path to Long-Term Financial Stability. A long-term solution must be found, not another temporary solution that must be revisited by future policymakers, all while not increasing taxes on employers or employees.
- Encourage Employees to Save in Pre-Tax Roth IRAs or After-Tax IRAs. Congress should continue to pass sound legislation that encourages employees to put aside money in their own personal retirement plans, as well as working with their employers to set aside funds. AGC supports current law allowing employers to proactively create 401(k) plans for their employees and encourages great educational campaigns to continue more use of these plans.
- Shore Up Multi-Employer Pension Plans for Union Workers and Employers. After the passage of the Pension Protection Act, Congress should continue to monitor the health of multi-employer pension plans to ensure these plans can pay their expected benefits without bankrupting the employers who pay into the plans.