Securing a Decent Retirement for All Americans

"To me, Social Security is more than a government program. It is a solemn compact between the generations. It is responsible to make the strength and solvency of Social Security a major national priority. And it is responsible to tell the American people exactly how you propose to do it." - Al Gore

Social Security has always been intended as a baseline guarantee to ensure that Americans can live in dignity after they can no longer work. Every American deserves a secure retirement - with a basic income guaranteed by Social Security and strong opportunities for additional savings and pensions. To make that goal a reality, Al Gore proposes to strengthen the three legs of retirement security: Social Security, personal retirement savings and work-related pensions. Gore's proposal for Social Security will strengthen the system and extend its solvency until at least 2054, while eliminating the national debt by 2012. And Al Gore will fight any attempt to cut Social Security benefits or increase the retirement age. As President, Al Gore will continue to find ways to help families save for the future, but not by endangering their Social Security.

SAVING SOCIAL SECURITY

Preserving Social Security's Fundamental Guarantee. Social Security has been an unshakable covenant between generations for 65 years. Because of the coming retirement of the Baby Boom generation, however, Social Security faces new challenges that threaten its long-term viability. Al Gore believes we have to strengthen Social Security the right way, without unraveling its basic guarantees. Today, because of our sound management of the economy, we have a chance to save and strengthen Social Security, so it is there, not just for seniors, but for their children and grandchildren, too. To save Social Security, Al Gore believes that we must use our historic prosperity and projected budget surplus to strengthen the Social Security Trust Fund until at least 2054 and to help pay off the nation's public debt by 2012. In order to save Social Security, Al Gore would:

• Devote all Social Security surpluses to Social Security and debt reduction. Al Gore's balanced budget plan transfers the entire Social Security surplus ($2.3 trillion over ten years) to debt reduction and to improve Social Security. He believes Social Security should not be undermined by a large risky tax cut that spends Social Security surpluses.
• Strengthen Social Security until at least 2054 by using the long-term interest savings to extend solvency. Al Gore's plan to reduce the publicly held debt by nearly $2.3 trillion over the next ten years will produce significant interest savings. In 2011, the interest savings will be about $120 billion - all of which will be transferred to extend the solvency of Social Security. These interest savings transfers will grow to about $250 billion annually after 2015.
• Oppose Efforts to Raise the Retirement Age or Reduce Benefits. Al Gore knows that working people depend on their Social Security benefits when they were promised. He believes that it is wrong to advance plans that could force an increase in the retirement age. After a lifetime of hard work, Americans shouldn't be asked to work even harder. As President, Gore will fight against efforts to lower guaranteed Social Security benefits or to raise the retirement age to 70.

Improving Fairness for Widows, Widowers and Mothers. Al Gore has a fiscally responsible plan to strengthen Social Security and add new guarantees of fairness for widows, widowers, and mothers. While fixing unfair penalties, these changes effect less than five percent of the Social Security surpluses.

• Eliminate the Motherhood Penalty:
• Al Gore proposes to eliminate the 'motherhood penalty' by giving parents credit toward Social Security for up to five years spent raising children - for those either out of the work force or working part time. (While Social Security is a gender-neutral benefit, women would be the primary beneficiaries of this reform.)
• Al Gore is proposing that the years spent raising children be counted as if the caregiver earned one-half of the average wage, which would work out to $16,500 in 2001. This amount would be indexed. If a woman worked part-time and earned less than $16,500, she would be credited for $16,500 of earnings in the computation of her Social Security benefits. Although the value of raising children cannot be quantified, this proposal would help ensure that all women are rewarded equally for years spent raising children.
• Eliminating the "motherhood penalty" will benefit up to 8 million Americans, most of them women who would get an average of about $600 annually in additional benefits. Lower-income parents who take advantage of this reform could see their Social Security benefits rise by as much as $2,100 per year.
• Increase the Widow Benefit: Under current law, when a spouse dies, the survivor receives one-half to two-thirds of the couples' combined benefit. Yet this is not enough to ensure that the surviving spouse remains out of poverty.
• Al Gore proposes to increase the size of the widow benefit to 75% of the combined couples' benefit to assure that Social Security benefit reflects the real cost of living. In order to ensure that this proposal is progressive and targeted, this benefit would be capped at the average Social Security retirement benefit.
• Increasing the widow benefit would help more than 3 million widows and widowers and increase the benefit for those eligible by $1,000 annually, on average. The maximum benefit increase in 2001 would be about $4,100 annually.

RETIREMENT SAVINGS PLUS ACCOUNTS

Social Security alone is not enough to help most families afford their needs in retirement: however, proposals to privatize part of Social Security would lead to cuts in benefits that would only make matters worse. Al Gore proposes Retirement Savings Plus accounts, which would add to - not take away from - Social Security. They would not be the product of any reduction or diversion of Social Security revenues, and they would not involve any changes to the Social Security program.

• Building on IRAs: Retirement Savings accounts would be simple, voluntary, and based in the private sector, not managed by the government. They would offer an important new choice for millions of families and leaving working families with a sizable nest egg at retirement. For example, if a couple making $30,000 annually each fully participated in the plan by saving $10 a week, at the end of 35 years they would have a retirement nest egg of more than $400,000 - on top of, not instead of, full Social Security.
• Voluntary Contributions, With a Tax Credit to Match Savings: Contributions to the Retirement Savings Accounts would be voluntary. No one would be forced to join, and no one's Social Security money would be diverted to the accounts. When the plan is fully phased in, those who choose to participate could have up to $2,000 a year in their accounts; $4,000 for a couple. Tax credits would match an individual's savings, and help it grow even faster. The match would be progressive, offering the greatest rewards to saving by lower-income people.
• For a married couple making up to $30,000 annually, each spouse could contribute up to $500 annually to their own accounts. The refundable tax credit would cover the other $1,500 - providing a total account of $2,000 each.
• For a married couple making between $30,000 and $60,000 annually, a $1,000 contribution (per account) would be matched by a $1,000 refundable tax credit per person.
• For married couples earning between $60,000 and $100,000, a $1,500 contribution would entitle them to a $500 tax credit per person. (Income thresholds for single filers would be half those for married couples; individuals could contribute less than the maximum.)
• Tax Deductible Contributions: Similar to traditional IRAs and 401(k)s, contributions to these accounts would be tax deductible. Accounts would grow tax-free, and withdrawals would be taxable.
• Accounts Would be Maintained by Private Financial Institutions: These would not be "government" accounts. Similar to IRA accounts, they would be offered and administered by private financial institutions. Financial institutions would establish Retirement Savings Plus and provide a variety of options for individual savers. In order to keep down administrative costs for savers (and financial institutions), avoid day trading, protect participants from scams, and reduce high risk investments, financial institutions would be limited to offering investment options based on broad-based mutual funds for equities, bonds and government securities.
• Retirement Savings Plus - Not Just for Retirement: While the primary goal of Retirement Savings Plus would be to create a vehicle to supplement Social Security, they could be used for other purposes. Like IRA accounts, participants in this plan could withdraw their savings to pay for college education, to help purchase a first home or to pay for catastrophic medical expenses. Participants would, however, be required to maintain a sum in their accounts for five years before it could be withdrawn.
• Making Savings Easier - and More Successful: Not only would Retirement Savings Plus make saving for retirement more affordable, but it would also make it easier. Al Gore would direct the IRS to find a mechanism that would allow taxpayers to choose to deposit a share of their refund directly to these accounts, and the IRS would deposit their tax credit directly at the same time. With a simple check-off on their tax returns, workers could see up to $2,000 deposited in their Retirement Savings Plus each year. Rules would be developed to ensure that Retirement Savings Plus complemented and strengthened existing retirement vehicles, like 401(k)s.

Examples of Retirement Savings Plus:

SECURING PENSIONS FOR WORKING AMERICANS

Al Gore knows that businesses want to do what is right by their employees. That is why he will continue his work - begun as a U.S. Senator and continued during his time as Vice President - to expand pension portability, simplify the pension process for small businesses and protect employee pension funds.

• To help small businesses manage the costs of providing their employees with adequate pension programs, Gore will work to implement a 50% tax credit for 3 years of qualified expenses of establishing a new employee plan.
• Gore will continue to work to simplify our pension system - reducing unnecessary paperwork and fostering an atmosphere of cooperation - so that small businesses can more easily make tax-advantaged savings programs available to their employees. In the end, less money needs to go to accountants, lawyers, and other consultants.
• Gore believes that government - state, local, and federal -should not use public pension systems to mask budget deficits or spending increases. Federally, Gore fought for and will always fight for protecting the Social Security surplus. Gore also believes there should be strict guidelines on how state and local governments invest pension funds in the private equity markets.
• Gore will make it easier for those who work in physical labor, and move from job to job, to retire early -- by making sure they don't face arbitrary, bureaucratic limits on their retirement benefits and how they are calculated.
• Al Gore will crack down on companies that try to change pension plans behind employees' backs. He will require that companies fully disclose any changes that might reduce benefits -- and penalize those that don't. He will also work to enable more long-term employees to keep their old plans if they desire.
• Al Gore will get tough on companies that try to rob employees' pension benefits by misleading employees or practicing age discrimination.

Source: Al Gore for President 2000 Web Site