Why Social Security Private Accounts are Dangerous For People

SOCIAL SECURITY FACTS
Why Social Security Private Accounts are Dangerous For People with 
Disabilities: Distinguishing Types of Privatization 


Some people promote private accounts within Social Security as a way to 
ensure more money for workers when they retire.  While there are serious 
problems with privatizing Social Security even for retirees, the stakes 
are much higher for people with disabilities and their families. For 70 
years, Social Security has provided predictable income for millions of 
Americans when they most need help. Hurricane Katrina dramatically shows 
the value of receiving guaranteed benefits when people unexpectedly 
become disabled, die tragically or retire earlier than expected.  

Social Security: Essential Benefits for People with Disabilities & Their 
Families 

Most workers contribute to Social Security through their payroll taxes.  
The program insures the vast majority of American families for the time 
when they face retirement, disability or death.  Social Security provides 
predictable monthly income for a wide range of eligible individuals and 
families.  People with disabilities and their families who receive 
guaranteed monthly Social Security benefits include: disabled workers and 
their dependents; retirees with disabilities; disabled dependents of 
retirees; disabled survivors, and disabled adult children and disabled 
widow(er)s. [Disabled adult children are individuals whose disability 
began prior to age 22 and who receive benefits based on the earnings 
record of retired, disabled or deceased parents.]

Private Accounts: No Protection for People with Disabilities & Their 
Families 

Private accounts allow individuals to set aside money for retirement. 
Workers who establish private accounts would rely on stocks and bonds to 
generate savings. When they retire, they would get reduced Social 
Security benefits based on how much money they put into a private 
account. Under this approach, people lose future guaranteed fixed 
benefits and may, in fact, get fewer benefits because it is impossible to 
predict profits from stock market investments.  

This risk is particularly great for people with disabilities who 
generally are unable to have a full work life in which to save for 
private accounts.  Both they and their families would be hurt. Since 
these accounts are not designed to address the intergenerational needs of 
families, there would be no protection for the disabled adult children of 
workers who retire, die or become disabled.  Similar risks would exist 
for children whose parents die or become disabled and for retirees and 
their spouses.

In 2001, the Government Accountability Office studied several plans to 
change Social Security. It concluded that, compared to the current 
program, people with disabilities would get much lower benefits under 
plans that would use payroll taxes to create individual private accounts. 
There is no guarantee that people with private accounts will do better 
than people who get fixed monthly Social Security benefits and they could 
do much worse.  

Advocates for private accounts suggest different ways to fund them. One 
would use the current surplus in the Social Security Trust Fund. A second 
way would allow workers to divert some of their payroll taxes to 
self-fund their private accounts. Regardless of how they are funded, the 
result is the same: private accounts would reduce funds to pay future 
guaranteed monthly Social Security benefits.    
 

Private Accounts: Different than Privatizing Other Governmental 
Functions  

There is common confusion between privatizing Social Security through 
private accounts and efforts to privatize other governmental functions. 
Many non-profit agencies now receive federal, state or local funds to 
provide important social and human services. [For example, some 
disability groups provide vocational training or mental health services 
for people with disabilities.] Under these arrangements, non-governmental 
agencies contract to provide public services. In some situations, these 
approaches are very successful. But privatizing Social Security is a 
totally different idea.  Proposals to create private accounts in Social 
Security will not produce the same result: they will replace guaranteed, 
predictable monthly benefits with a risky investment system which is 
especially dangerous for people with disabilities and their families.

Private Accounts: No Governmental Accountability 

It is possible to support privatizing some social services while opposing 
the privatization of Social Security.  There are extremely important 
distinctions between these two approaches to privatization. When social 
services are privatized, there is the possibility that non-public 
agencies can provide services as good or better than the government.  If 
the non-public agency does a bad job, the state can terminate the 
contract because the government is still accountable. But under plans to 
privatize Social Security, there is no governmental accountability. 
Instead, privatizing Social Security will gut the current system of 
predictable monthly benefits for people with disabilities and others. 
Remember that privatizing a government service may provide the same or 
similar benefits and government remains ultimately accountable. In 
contrast, privatizing Social Security will never replicate guaranteed 
cash benefits. Instead, private accounts shift all the risks onto 
individuals.  
 
Private Accounts:  No Help for Social Securitys Long Term Financial 
Future  

Proponents of private accounts  including the President   admit that they 
do nothing to restore the financial stability of Social Security to meet 
future needs of eligible individuals. Creating private accounts will 
actually pose an even greater threat to Social Securitys stability.  
Although there is concern about the programs long-term funding, Congress 
could improve and strengthen the financial future of Social Security 
without major changes.   


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The disability community urges Congress to request a beneficiary impact 
statement on every major component of any serious proposal. In a program 
that affects millions of individuals of all ages, it is essential for 
policymakers to look beyond the budgetary changes to understand the 
actual impact on peoples daily lives.



Produced by the Consortium for Citizens with Disabilities, 1660 L Street 
NW, Suite 701, Washington, DC 20036. See www.c-c-d.org. CCD, a coalition 
of over 100 national consumer, provider & advocacy organizations, 
advocates for national public policy to ensure the self-determination, 
independence, empowerment, integration & inclusion of the 54 million 
children and adults with disabilities living in the United States. 


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Social Security Letters to the Editor: Protecting Guaranteed Benefits

We are providing five sample Letters to the Editor to help raise public 
awareness about potential changes in the Social Security program that 
will cut guaranteed benefits for individuals who qualify for disability, 
survivors or retirement insurance. Please circulate these templates to 
your members. Ask them to personalize with their name and address and 
send to their local newspapers. Letters to the Editor must be 250 words 
or less so these are short on purpose!  Elected officials read these 
types of letters so please do whatever you can to continue to spread our 
message! 
 
Sample 1 

Dear Editor, 

Social Security was designed to provide economic security for American 
workers and their families when they retire, become disabled or die. 
Social Security is unique because it gives guaranteed benefits to 
multiple family members: workers, spouses and children. Even younger 
workers and their families qualify for disability and survivors benefits. 
The current value of Social Security equals disability insurance worth 
$350,000 and life insurance worth $403,000 for a young worker with a 
spouse and two children.   

Without Social Security, millions more Americans would face poverty when 
they most need the security of a guaranteed income. It is not a 
well-known fact that people with disabilities and their families get 
benefits from all three Social Security programs: survivors, retirement 
and disability insurance. 

Any efforts to dismantle Social Securitys basic structure would threaten 
the current and future economic security of millions of children, spouses 
and people with disabilities. It is true that Social Security will face 
funding issues in the future. However, we can strengthen the programs 
financial future without major changes. There is no need to dismantle the 
most successful family insurance program in the history of our country.   

Sincerely, ADD YOUR NAME & ADDRESS 

Sample 2

Dear Editor, 

Many public officials are unwilling to acknowledge the value of family 
insurance for millions of Americans. Over 17 million people who are not 
retired get insurance through the Social Security program. This includes 
over 7 million people with disabilities, their spouses and children. 
People with disabilities receive all three types of Social Security: 
survivors, retirement and disability insurance. 

It is very unfortunate that President Bush and others promoting private 
accounts do not understand how much families across the country rely on 
monthly Social Security benefits. We must protect the Social Security 
program so that it can continue to provide guaranteed benefits for 
American families who turn to it at the time of their greatest needs.  

Private accounts will not provide the same security. Instead, they will 
cut guaranteed benefits and greatly increase both the budget deficit and 
national debt. Congress must request a beneficiary impact statement on 
every major part of any serious Social Security proposal to understand 
the actual impact of changes on peoples daily lives. 

Sincerely, ADD YOUR NAME & ADDRESS 
 

Sample 3

Dear Editor, 

It is possible for both political parties to work together to ensure that 
Social Security remains strong for all Americans. Members of Congress and 
the President need to understand that Social Security is Americas most 
effective family insurance program. The current and next generations 
deserve a Social Security program that is based on adequate and secure 
benefits. Congress should maintain a strong social insurance system that 
serves everyone, including people who retire, people with disabilities 
and surviving family members. Millions of Americans cannot afford to lose 
these guaranteed benefits now or in the future.  Since Hurricane Katrina, 
dont public officials realize how much people value federal assistance?   

Sincerely, ADD YOUR NAME & ADDRESS

Sample 4

Dear Editor,

Social Security has been there time and again for workers and their 
families. It protects us against loss of income due to disability, death 
and retirement -- risks we all face.  It is there when we need it most.  

There is no doubt that more families will rely on Social Security as a 
result of Hurricane Katrina: children who lost parents; people with 
disabilities who face aggravated health conditions; older people who 
retire because their jobs are gone.  No one could plan for the 
devastation of Katrina. Many people now face the need to cash in their 
IRAs and private pension accounts to rebuild their lives.  But this is 
not what they intended for their retirement nest eggs. 

Katrina reminds us that we all rely on Social Security because we never 
know what tomorrow may bring. Congress should work to strengthen the 
program and abandon efforts to replace guaranteed benefits with a risky 
private investment system.   

Sincerely, ADD YOUR NAME & ADDRESS

Sample 5

Dear Editor,

I want Social Security to be there in the future for others like me who 
need it. I [or My family and I] have benefited from Social Security. 

INSERT PERSONAL INFORMATION 

Social Security is an insurance plan to provide guaranteed monthly 
benefits that families can count on when they most need it. Social 
Security protects workers and their families when they retire or face 
disability or death. Privatizing Social Security would be a huge mistake 
because it would replace predictable income with a risky investment 
system and tremendously increase our national debt. 

Sincerely, ADD YOUR NAME & ADDRESS




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