Media Release
| For Immediate Release | Contact | Phone |
| June 8, 2005 | Mike Olender | 732-246-4772 |
| Ev Liebman | 856-966-3091 |
New Report: President's Privatization Plan Cuts Social Security Checks by $327,542 for a Typical New Jerseyan
New Jerseyans Call on Reps. Smith, Saxton, Ferguson, Frelinghuysen, LoBiondo to "Take a Stand" Against Bush Proposal
Trenton, NJ — New Jersey Citizen Action released a new report today which reveals that a typical New Jersey worker would suffer a $327,542 Social Security benefit cut under President Bush's privatization plan over the course of their retired life. Assemblywomen Linda Greenstein (D-14) joined a diverse group of community leaders to speak out against the massive benefit cuts under "progressive indexing" that the President has called for that are analyzed in this report.
The Institute for America's Future, a non-partisan public policy organization, studied new details of the President's Social Security plan made available by the President on April 28, 2005. This report is the first state-specific analysis available on the impact of the President's plan and finds that regardless of whether or not an individual chooses an optional private account and regardless of how well or poorly the stock market performs, the President's plan would result in steep Social Security benefit cuts for New Jersey from what they are now promised by current law.
"This report confirms what middle-class New Jersey families already know – President Bush's plan to privatize Social Security and slash benefits is the problem, not the solution," said Ev Liebman, Program Director of New Jersey Citizen Action. "Congressmen Smith, Saxton, LoBiondo, Ferguson and Frelinghuysen owe it to their constituents to take a stand against the President's plan to privatize Social Security and cut benefits for New Jersey families. New Jersey Citizen Action and the Keep the Promise Coalition are demanding that our leaders in Washington ensure that all Americans get what we deserve from Social Security – not come up with plans to cut our benefits."
The report shows that under the President's plan, a worker earning the average New Jersey wage of $46,182 who chooses a private account and retires in the year 2080 – the final year of Social Security's 75 year planning horizon – would see a lifetime benefit cut of $327,542 in today's dollars. This is the benefit cut a New Jerseyan would suffer even after accounting for earning an average 4.35 percent return on their private account investment.
The report also finds that various factors could shrink or increase the benefit cuts included in the President's plan – but even under the most optimistic circumstances – the President's plan cuts Social Security benefits for average New Jerseyans. Under no circumstance would average New Jerseyans receive more from the President's plan than the $875,160 Social Security now promises under current law:
- If a New Jersey worker wants a surviving spouse to continue benefiting from their private account after his or her death, benefit cuts increase to $396,576. The cost for making a private account inheritable is very high.
- If a New Jersey worker chooses a "bond only" investment portfolio for their private account, or suffers a market downturn prior to retirement (2.97 percent rate of return), they would see benefit cuts of $327,542.
- If a New Jersey worker chooses an investment portfolio that performs exceptionally well (6.8 percent rate of return – which many economists consider nearly impossible to reach with a private account), they would see benefit cuts of $393,883.
- And even if a New Jersey worker chose not to participate in a private account at all, the President's plan mandates benefits cuts of $350,554.
"We knew the President's plan was bad, but until this report, we had no idea how disastrous the president's combined plan for benefit cuts and privatization would be on the typical New Jersey worker, said Mike Olender, NJCA Organizer. "This is why Smith, Saxton, Ferguson, Lobiondo, and Frelinghuysen need to take a stand against President Bush's plan to privatize Social Security and slash benefits for middle-class families."
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New Jersey Citizen Action is the state's largest citizen watchdog coalition, with over 100 affiliate organizations and 60,000 individual members.
