Running Head: POLICY BRIEF 1

The Importance of social security and retirement to the aged population

Introduction

Retirement is the time of life between 65-70 years of age when one chooses to

permanently leave the workforce. Social security was originally established to pay workers after

they left the workforce (Hudson,2014). Social security income was developed to support retired

workers, this allowing worker to have a way to survive. Many Americans depend on social

security as a supplementary income. Even with this it’s still a challenge for older individuals to

be able to maintain in society which has left many still in poverty. Retirement years are supposed

to be a time of enjoyment, yet many are not able to enjoy it and left to return back into the work

force. All the years spent working hard and stressing retirement should feel good. This isn’t

always the case for many, while some still must work past the age of retirement. It wasn’t until

World War II that adults could retire (Hudson,2014). Hence, Public sector workers whose

contracts promised good benefits were not fortunate when they reached the age of retirement. It

wasn’t until the employee retirement income act in 1974 that workers still had no guarantee of

the benefits that they had worked so hard for would still be available once they retired. In

American society retiring is a goal and many work hard so that they can retire at a decent age.

According to Hudson (2014) before one completely leaves the work force some will work part

time and then ease their way into quitting the workforce.

The age for retirement has not changed but many individuals are not able to retire even at

the recommended age to receive benefits (Hudson,2014). Even though social security is best

known for retirement it is also provides survivor benefits and income for people who are

disabled. Statistics show in 2022, 70.61 million Americans collected benefits from social
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security (Hudson,2014). In addition, workers who work until the age of 70 or older can collect

higher monthly benefits. In addition to this each eligible recipient doesn’t receive the same

number of benefits. This varies by each person in which is due to the income and guidelines

(Hudson,2014). According to Peter (2005) many policy makers have debated to cut the program

due to the federal budget decreasing. Authors state that the program must be stopped because of

the program beginning to bankrupt the country. In contract the long campaign against social

security republican have been against social security. From 1930-1970 the social security

administration along with the house and senate dominated policy making for social security. In

1960 Barry Goldwater suggested that social security be made voluntary. Since then times have

really changed, many Americans depend on social security and even still the amount that is given

still seems to leave many struggling. Without extra help from family, welfare benefits if eligible,

and other government assistance many would be in poverty. Even with the amount some are

given, the prices of everything going up and wages and social security staying the same leave not

only the older population struggling but the younger population as well. It’s a hard position to be

in when your 70 years old or older and can’t get a job because your unable to work and the only

income being received is social security.

The future of social security and decision to still move forward with the program is up

too American leaders to decide. Social security has been an important factor in keeping older

adults from going into poverty (Peter, 2005). Unfortunately, many policy makers are unwilling to

change the policy. Hopefully, in the coming years policy makers can establish policies that

would put older Americans in a better situation by increasing funds and make it so the younger

generations can have a chance to retire at 65 a not have to work their entire life. This policy brief

will examine the effects of social security benefits, and the issues surrounding policy changes.
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Hopefully, this policy brief will land in the hands of policy makers and change their view on

social security retirement.

Executive summary

This policy brief intends to advocate social security wages among seniors be increased

along with the age restriction for retirement be adjusted to an early age of 60. Social Security

benefits are the most important source of U.S. retirement income. Over time, however, trends in

employer pensions, societal changes, and Social Security program changes have changed the

income among the aged population. Some researchers have argued that the Population Survey

(CPS) does not currently measure the income for retirement among the aged population along

with how many rely on the program to live. To address these concerns, the Census Bureau

revised income-related questions in which examines reliance on Social Security benefits among

people aged 65 years old or older (Pter,2005). These findings reported that almost half of the 65

and older population live in households that receive at least 50 percent of total family income

from Social Security (Peter,20050. With this only a quarter of the individuals aged 56 and older

receive 90 percent of their family income from social security (Peter,2005).

With the cost of living increasing along with the rate of inflation this makes it more

challenging for the aged population. Inflation occurs when changes throughout the economy

drive prices higher and higher, reducing consumer purchasing power (Report comprehensive

policy,2023). This means that each dollar you earn buys fewer goods and services. For example,

the cost for a dozen eggs has doubled, and the prices are still rising. What one use could afford in

the grocery store now you are barely able to buy enough food to feed yourself let alone a family

of 5. The main cause of these broad-based price increases are imbalances in supply and demand.

There are three primary reasons demand has outranked supply: supply shocks increased money
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and consumer expectations (Report comprehensive policy,2023). For example, during the Covid-

19 pandemic it left many people without jobs and at home, which was ordered by the shelter in

place act. This made people less inclined and eager to spend money. In this regard the world

suffered and experienced low supply, which made it difficult for the supply to sustain with

demand (Report comprehensive policy,2023). Luckily this gave more American time to save

their money but on the other hand it left others with no money to spend due to the

unemployment. With this Many were left unable to pay rent, and bills, therefore once the world

opened backed up many were left trying to catch up on bills and other expenses. Many elders

will not be able to live within their means and fall below the poverty line. With the rise of

inflation, the cost of everything including rent, household supplies, food, services, gas, lights,

water, etc. is increasing. With this change still the change in wages, social security, and

retirement has still stayed the same. When it does come time to be able to retire at the

recommended age of 65 many may be in poverty and unable to retire.

It’s important that something be done about this matter. Recommendations for action

include raising social security wages, making all older Americans aged 60 and older eligible, and

raising min wage so that when one does want to retire, they can have enough to support

themselves. Retirement is supposed to be the golden year not a time to struggle and stress. By

doing this it can relive some American and give them hope in looking forward to retirement.

Right now, many are struggling to even meet the requirements to retire. In addition to taxes for

social security being taken out every month, individuals still must save additional money on the

side.

Context and importance of the problem:

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Social Security helps older Americans, workers who become disabled, wounded warriors,

and families in which a spouse or parent dies. Today, about 179 million people work and pay

Social Security taxes and over 65 million people receive monthly Social Security benefits(Report

comprehensive policy,2023). Many older American depend on social security once they retire. If

there aren’t enough workers contributing to social security, many will be left to still work. Social

Security is a stable foundation of income in which Americans can build to plan their retirement.

It also provides insurance protection to workers who become disabled and to families whose

breadwinner passes away. The problem is that there are not enough workers that are contributing

to social security. If there aren’t enough workers this makes it harder for the aged population to

retire. Almost all Americans who work participate in Social Security. According to the Social

Security Administration every month regardless of if we like it or not payroll tax contributions

are taken and almost all older adults receive Social Security benefits. In fact, 97% of American

adults aged 60 and older receive Social Security estimates (Report comprehensive policy,2023).

Social Security brings many advantages for elders and even disabled individuals. It provides a

solid foundation that individuals know that they have retirement protection no matter what the

salary. Since social security is based on monthly earnings every individual’s amount will vary.

The problem is if an individual is only getting paid min wages, how will they ever be able to

retire if they are barely getting by. This brings about concern, it may be rewarding for one and on

the other end one may still have to work until they reach the min amount to be fully retired.

In contrast, research shows that 50% of older adults who live alone and 23% of older

couples do not have enough money to cover their basic needs (Report comprehensive

policy,2023). Households with elderly people struggle more in some areas versus others

depending on the cost of living and other expenses. Many of the elderly population must live
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with a family member or someone just to cover expenses. Retirement is supposed to be the

golden years and a time of happiness, many wouldn’t describe it that way but describe it as a

time of struggle and despair. Recent research found that many older Americans don’t have

enough money to get by. There has been an estimated 50 percent of adults aged 65 cannot pay

for the bare minimum.

Critique of policy option(s)

The period after retirement in which is the retirement period the golden years of many

older individuals. This period typically poses economic risks and challenges that differ from

those faced during working life. Americans reach retirement with minimum preparation and,

thus, the government still provide some sort of benefits. Their benefits may not be as high as

someone whose salary is higher, even then individuals can still receive social security. Social

security plays an important role, especially when private pensions and personal savings are not

enough. However, research shows that retirement security among older Americans is a major

concern for many Americans. In 2014, the Employee Benefit Research Institute’s Retirement

Confidence Survey reported that only 18% of employees were confident that when it came time

to retire they would have enough money to do so (Poterba,2014). However, 36 % of respondents

reported total savings were under $1,000 dollars (Poterba,2014). For most Americans this is

barely enough to cover a month worth of rent not to mention other expenses including care

note/insurance/food, supplies, etc. Author Poterba (2014) suggests the differences between

retirement funds that differ between upper and lower classes. Elderly people who must work and

those who cannot afford not to. The elderly who can afford not to have no worries on retirement

and can live comfortably, while the ones who must work until the recommended age still don’t

retire at the age 65 and have to continue to work. If the elderly with shorter average lifespans
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could be accommodated by more generous early retirement and disability benefits, the nation

would have a better system of fair retirement. For instance, people who start work at older ages

because of their educational experiences, environment will may retire at older ages above 65.

People who have an early start and obtain good jobs would be able to retire at earlier ages. Data

obtained from the population survey, only 5.4% of the individuals 65 and older in the lower

percentile of income receive pension income, and in 2013 26.4% of them received asset income

(Potrba,2014).

Additionally, with the ongoing increase in the older population American and many other

parts of the world are experiencing longer retirement ages due to less saving, and less working

during their younger years (Potbra,2014). Many Americans in their earlier years don’t think

about retirement, pension, social security, etc. During these years many younger people spend

most of their money instead of taking life more seriously. By doing this it has put a dent into

society, and by the time they realize they are behind in terms of preparing for the future by

adding to their retirement or savings, the eligible time that they are supposed to retire is pushed

back. Research shows that economies, both private and public savings shows that there is a

decline because of this more pension spending (Amaglobeli et al., 2019). This will need to

change if younger people want to enjoy their pension and retirement benefits (Amaglobeli et al.,

2019). With increase in market economies and low-income developing countries relatively

younger generations will lead to more savings (Amaglobeli et al., 2019). Meaning that younger

generations will have private saving to increase their retirement. The aging process in many

countries implies less saving, all else equal. Generally, saving behavior follows a life cycle

pattern. In their early years of employment, people tend to borrow during their early working

years, people save and once they are out of the labor force, they spend some of their savings
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(Amaglobeli et al., 2019). While this pattern may not be as pronounced in lower-income

countries, it means that societies at a more advanced stage of aging are likely to see lower

aggregate savings (Amaglobeli et al., 2019).

Retirement savings include assets in contribution plans, including as 401(k) plans, as well

as individual retirement accounts (IRAs) (Amaglobeli,2019). Most employers have 401k

retirement plans, and when individuals start a new job funds will be transferred to the new

employer. This will require employers to automatically enroll employees in the plan. However, it

is currently optional for employers to do decline and save on their own, but this helps to ensure

some stability for retirement (Report comprehensive policy,2023). It will solely be up to

employees to opt out of the plan, who do not wish to participate. Additionally, individuals need

to take into consideration student loans, and other loans that they may have taken out can affect

individuals 401k. When you must pay down student loan debt, and other debt it makes it harder

to save for retirement. Secure 2.0 is a plan that lets employers make a matching contribution to

an employee’s retirement plan based on their student loan payments (Amaglobeli,2019). That

would ensure the employees are building retirement savings to make sur that they have a chance

to retire at a reasonable age. This Secure 2.0 plan will require employers to set a default

contribution rate of a min of 3 percent but not exceeding 10 percent (Amaglobeli,2019). This

plan is set to take place as soon as December 2023. In accordance to this plan taking affect the

age of retirement is pushed back for many to the age of 72 (Amaglobeli,2019). It used to be that

when you turned 70 you had to start withdrawing a minimum amount from your 401(k) every

year. Then, the age moved up and even with the increase in age some individuals are still not on

track for retirement.

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Normally, if you tape into your funds at an early age, you get penalized for using funds.

For employees who don’t want to have a retirement plan because it would be too costly the

secure 2.0 may relief some people. It will let employees make a penalty-free withdrawal of

$1,000 a year for emergencies only (Amaglobeli,2019). This will help people, on the other hand

it is taking away from the retirement funds, and many set some individuals back. With these

1,000 dollars may not be a lot to some, but it takes the average person 1 year to save 1,000.

Federal agencies such as the Department of Labor (DOL) is a agency that can assist individuals

ensure financial security for themselves and their families as they enter their golden years

(retirement) (Amaglobeli,2019). For example, federal retirement programs often have Cost-of-

Living-Adjustments (COLAs) to make sure that benefits are increased with the rise of inflation

(USGA,2023). This includes Social Security for over 60 million older Americans, and people

with disabilities. These COLAs are normally based on the price index. The price index guide is a

typically weighted average of prices for services in different areas in which the Bureau of Labor

Statistics makes these indexes (USGA,2023). Hence, the DOL requires each 401(k)-retirement

plan to provide each person with information on the plan and include any fees that are deducted

from the plan (USGA,2023). Most people who have a 401k or retirement plan don’t understand

how the plan works and overlook many of the fees. The DOL could help people have a better

understanding of the way the plan works. For example, before participants decide to engage in

the plan, they can disclosure any fees up front. Divorce and climate change can also affect

retirement and social security. Divorce can be a financial shock that has a major effect on

retirement and social security (USGA,2023). A divorcing spouse can take steps to claim a

portion of their former spouse’s retirement benefits (USGA,2023). If a person is at full

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retirement age when they start to receive benefits, the benefits can equal one-half of their

spouse's full retirement amount (USGA,2023).

Policy recommendations

Public policies play an important role in supporting older Americans and the efforts to

increase social security and retirement funds. The efforts to increase funds will help to ensure

financial stability among elderly people and pension systems. These policies can be grouped into

pension system, financial, and labor market policies. Creating a master plan, changing policies

and or making recommendations to policy makers can help to relief some older individuals of

hardship and make a way for upcoming generations to come. Given these unique challenges of

retirement and social security, lawmakers may consider a variety of approaches that include

several policy areas supporting older adults. These supporting areas include social, physical, and

economic wellbeing (Report comprehensive policy,2023). Additionally, some states have already

adopted a plan for aging. This framework for aging is used to develop a guide to help with state

and local policies, programs and funding that are centered around the needs of older adults

(Report comprehensive policy,2023). Several states already are implementing these changes

which outline long term changes and comprehensive approaches to support the multiple aspects

of retirement and other segments of an older person’s life (NCLS,2021). Not only does

retirement need attention but other segments as well including health, human services, housing,

transportation, employment, and income security. The master plan campaign was developed to

address aging adults regarding retirement, health insurance, living, etc. The term “Master Plan

for Aging” was developed by The SCAN Foundation(NCLS,2021). This foundation’s goal is to

transform the planning process for older people and look deeper into the aging policy issues
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(NCLS,2023). However, each states master plan is different along with there strategic action

plans, and policies.

Conclusion

This policy brief highlights social Security retirement benefits and the importance of

these benefits for the growing population of older Americans aspects of planning for retirement.

For this, we developed potential policies that can change the way this system of retirement works

and try to create ways that will better benefit older Americans. A key pillar of retirement security

in the United States is the Social Security system and, therefore, understanding the Social

Security program itself is an essential component of optimal financial planning for the future.

Yet there is wide-spread confusion about the retirement age and benefits associated with this. Th

main confusion is how benefits are calculated, about receiving benefits, age of retirement, and if

social security will be enough to live from (Report comprehensive policy,2023). Being that many

American depend on social security for retirement this lack of knowledge could lead to many

older individuals falling below the poverty line. Not only do many look forward to social

security and retirement but they depend upon it as well. Therefore, being able to maximize

benefits would keep older American from falling into poverty and they would actually be able to

leave the workforce and enjoy the life they worked so hard for.
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References

Amaglobeli, D., Chai, H., Dabla-Norris, E., Dybczak, K., Soto, M., & Tieman, A. (2019). The

future of saving. Staff Discussion Notes, 19(01), 1.

https://doi.org/10.5089/9781484388990.006

Hudson, R.B. (2014). The New Politics of Old Age Policy. John Hopkins University Press

NCLS. (2021). Report comprehensive policy approaches to support the aging population.

National Conference of State Legislatures. Retrieved from

https://www.ncsl.org/health/comprehensive-policy-approaches-to-support-the-aging-

population

Office, U. S. G. A. (2023). Financial security for older Americans. U.S. GAO. Retrieved 2023,

from https://www.gao.gov/financial-security-older-americans

Peter, D. A. (2005). Why We Can Afford Social Security. Insuring Health and Income Security.

Poterba, J. M. (2014). Retirement security in an aging population. American Economic Review,

104(5), 1–30. https://doi.org/10.1257/aer.104.5.1

Report comprehensive policy approaches to support the aging population. National Conference

of State Legislatures. (n.d.). Retrieved May 4, 2023, from

https://www.ncsl.org/health/comprehensive-policy-approaches-to-support-the-aging-

population