Liberal myth

Lower-income citizens would be better off under the current system than with personal retirement accounts.

The facts

Personal retirement accounts would allow lower-income workers to earn more on their Social Security investments than they would earn in the current system and could create assets that could be passed on to their families.

Current system hurts the poor

• Social Security is now structured to pay higher benefits to workers with lower incomes.

But

• Lower-income workers on average do not live long enough to receive more in benefits than they paid in taxes—and the extra income is absorbed into the system, not given to heirs
• Virtually all low-income males are more likely to pay more into the system than they will ever receive in benefits
• Minorities receive lower rates of return on their investment since they often have lower incomes, and thus are unlikely to live long enough to receive anything more than what they paid in taxes.

PRAs give meaningful benefits

• PRAs offer higher rates of return than current Social Security does
• A retiree who dies early will be able to pass on his PRA to his or her family

Related Heritage research

• David C. John, “The Top 10 Myths About Social Security Reform“
• All Heritage Social Security research
• Issues 2004: “Social Security”