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Joint Economic Committee Democrats
Social Security Charts

Chart 4.2
Last updated 7/6/06

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  • Social Security provides workers with a guaranteed, predictable source of retirement income. On average, retired workers aged 65 or older receive about 60 percent of their income from Social Security. Only 40 percent of their retirement income comes from other sources and is subject to risks such as stock market returns, interest rate fluctuations, pension default or the risk of outliving one’s assets.

  • The President’s proposal would greatly reduce the guaranteed benefit compared with what is scheduled under current law. As a result, retirees would have to rely on riskier sources of income to achieve any given standard of living in retirement. For example, the guaranteed Social Security benefit under the President’s proposal for a worker born in 2006 with medium earnings ($38,700 in 2006) would be only about a third of the scheduled benefit under current law. Other sources of income would have to be larger to achieve any given level of retirement income and those sources would be subject to risk.

  • For workers born in 2006 who would have medium earnings and who would receive 60 percent of their retirement income from Social Security under current law, the cuts to guaranteed benefits under the President’s proposal would mean that the guaranteed Social Security benefit would make up only 20 percent of that same income. The expected private account annuity, with all of its risks, would be 25 percent of that income and other sources would have to make up the remaining 56 percent. Thus, with the same total income, 81 percent of retirement income would be subject to financial market or pension default risk, compared with 40 percent under current law.