Lie: "By the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt...

... So if you're 20 years old, in your mid-20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now." Bush 1/11/05.

Truth:

The Social Security system cannot go "bankrupt," for it has no creditors. By law, the trustees will continue to pay reduced benefits even if the trust fund is exhausted. Payroll taxes will continue to come in and benefits will continue to be paid.

According to the trustees' intermediate economic forecast (neither doom nor boom), the trust fund will be able to pay about 73 percent of scheduled benefits in 2042 and about 68 percent of scheduled benefits in 2078.

Future presidents and Congresses could also choose to fully fund scheduled retirement benefits from general tax revenue.

Lie: "Most younger people in America think they'll never see a dime." Bush 1/11/05

Truth: Retirement benefits for today's younger workers - even under a "flat-bust" system - will be significantly higher than today's benefits in real terms.

For low-income Americans, currently scheduled benefits for those who retire in 2080 are $19,906 per year in 2004 dollars. If Social Security can pay only 68 percent of those benefits, that would be $13,536 per year, compared with benefits of $8,804 for low-income retirees who retired last year.

For the highest earners, Social Security is currently promising $53,411 per year for those who retire in 2080 (or $36,319 per year if Social Security can pay only 68 percent). Current maximum benefits are $21,891 per year for those who retired last year.

Lie: "In the year 2018... the money going out is going to exceed the money coming in." Bush 1/11/05

Truth:

According to the SSA, costs are projected to exceed income, including tax revenues and interest income from the trust funds' bonds, starting in 2028, not 2018. The 2018 date is when tax revenues alone no longer meet costs; workers have been paying extra taxes since 1983 to build up the trust funds' assets for just this eventuality.

Lie: "The problem is, is that times have changed since 1935. Then, most women did not work outside the house, and the average life expectancy was about 60 years old -- which for a guy 58 years old, must have been a little discouraging. Today, Americans, fortunately, are living longer and longer. I mean, we're living way beyond 60 years old, and most women are working outside the house. Things have shifted." Bush 1/11/05

Truth:

According to the SSA, the life expectancy for a 65-year-old man in 1940 was 76.9 years. Today, a man aged 65 can be expected to live to 81. Most of the increase in life expectancy in the past half century has been for infants, not for the elderly.

The increase in the percentage of women working outside the home has boosted Social Security's resources, rather than depleted them. Today, many women who worked receive a widow's pension rather than their own earned benefits. All the payroll taxes they ing someone else's retirement.

Lie: The population over 65 is much larger than it was when Social Security was created, something the creators never imagined.

Truth: When the actuaries sat down to design Social Security only 5.4% of Americans were over 65. But they estimated that by 1990 -- more than fifty years later -- the number would increase to 12.65%. And when 1990 rolled around, the percentage was 12.45. In other words, they knew almost exactly what the demographic profile of the retired population would be. And they designed the system accordingly.

Lie: Social Security is unfair because tomorrow's workers will have to support the Baby Boomers' retirement.

Truth: The Boomers have already paid ahead, leaving a surplus that will help carry Social Security through their demographic. What will really be unfair to younger workers is having to pay taxes to support the Boomers, plus investing in their own individual accounts and having to pay the transition costs of switching to privatization. Total privatization comes with a price tag of $9 trillion, and who do you think is going to pay for that?

Lie: Younger workers would have more money for retirement if they invested their Social Security taxes in stocks and bonds.

Truth: The Social Security is remarkably efficient, with overhead costs only 1%. Private accounts have an overhead cost of 15%, which comes directly out of earnings.

See also:

• Common Misconceptions about Social Security