SS 230: Social Security and Low-Income Workers
Low-income workers rely
on Social Security benefits to provide the bulk of their retirement
income, but without reform, future benefits could have to be cut by
as much as 30%. While that may not sound like much, it will cause
the elderly poverty rate to double and most of the people pushed into povery will be women and minorities.8
Accounts, on the other hand, help the poor in a variety of ways. For
one, PRAs earn a higher rate of return and, therefore, higher
retirement incomes. For another, because individuals would own their
own retirement account, their retirement savings contribute to and
increase their personal wealth. Increasing wealth is important
because the difference between the rich and the poor is much greater
in terms of wealth (savings and investments) than it is in terms of
Part of the reason the wealth gap is so large is because households
are unable to accumulate financial assets and leave inheritances.
Since personal accounts would be owned by the worker and could be
passed on to his or her heirs, all families could accumulate wealth.
This would help close the rich/poor gap for generations to come.
After all, shouldn’t all workers be part-owners of the world in
which they work? They could be with personal accounts!