In 1959, more than a third of all elderly Americans lived in poverty. Slashing that number to under 10 percent by the late 1990s was among the great U.S. triumphs of the 20th century. Social Security deserves a large share of the credit.
I believe eliminating old-age poverty entirely could one day be deemed a triumph of the 21st century. Even sustaining it at 10 percent would be a significant achievement.
But that meager goal is in serious jeopardy. My research shows more Americans are increasingly struggling to save enough for their later years. And one of the main ways they have left, Social Security, is just 15 years away from going broke.
This leads me to ask one question: Do Americans want to return to a time when so many of their elders died in poverty?
A Wobbly Retirement
Since its advent in 1935, Social Security has been one leg of Americans’ three-legged retirement stool. The other two have been the wide availability of defined benefit retirement plans and personal savings supported by broadly shared economic prosperity.
This stool turned out to be remarkably successful by reducing the poverty rate among Americans aged 65 and older from as high as 78 percent in 1939 to 35 percent in 1959 – as Social Security benefits began kicking in – to 10 percent by 1995.
But in recent decades, the defined benefit plans and worker savings legs have become increasingly wobbly. If they break entirely, saving Social Security becomes even more vital.
Businesses Shed Pension Risks
For much of the 20th century, defined benefit plans promised an annual lifetime payment determined by salary and played an important role in the financial security of many households with residents over 65.