May 6, 2008

AARP
601 E Street NW
Washington, DC 20049

T 202-434-2277
1-888-OUR-AARP
1-888-687-2277
TTY 1-877-434-7598
www.aarp.org

Dear Mr. Jorgensen:

Thank you for contacting AARP about the long-term prospects for Social Security or Social Security “solvency and about physician assisted suicide.” We appreciate hearing from you.

First, regarding physician assisted suicide, although our Board of Directors has considered the issue, it has taken no position on whether physician-assistedsuicide should be legalized. However, AARP does continue to raise awareness of many crucial end-of-life issues through dialogue about this and other difficult issues, both with our members and with the public-at-large. We support continuing education for health care professional in palliative care and other areas related to care of dying patients. We believe it is necessary as well as valuable to promote informed discussion—in our publication, and at conferences and professional meetings, and among the public.

I am pleased to tell you, Social Security is not “broke.” In 2006, the Social Security Trust Funds ran a surplus of about $190 billion. That surplus was added to Social Security’s accumulated reserves, which totaled about $2.05 trillion by early 2007. Those surplus Trust Fund dollars are loaned out to other parts of the federal government, by issuing bonds held as investments by the Trust Funds, and paid back with general revenues (tax dollars) including interest. These bonds are generating additional assets for Social Security in times of Trust Fund surplus, while assuring safety, since the U.S. government is one of the most credit worthy institutions in the world. In fact, in 2006, the Social Security Trust Funds earned $102 billion in interest at an average rate of 5.3%.

While the system is not in immediate crisis, the changing demographics of increasing numbers of older people in relation to younger people do call for some adjustments to ensure that future generations also enjoy the same essential protections of survivors insurance, disability insurance, and retiree benefits. If these changes are made sooner rather than later, modest adjustments will overcome the projected shortfall. Also, people affected by any changes will have more time to adjust their financial plans for the future.

While changes are necessary, AARP believes that some proposed reforms, such as establishing individual accounts carved out of Social Security are unwise. They would expose individuals to risks we view as unacceptable.

They would also be expensive to administer and require the government to incur huge new debt in order to transition to a new system while continuing benefit payments owed under the old system. It is important to know that—for all but the highest economic brackets—Social Security represents the major portion of people’s retirement income. The number of retirees relying heavily on Social Security onlyincreasesas people age and their other income sources dry up or are eroded by inflation.

Without any change to current law, Social Security has sufficient assets to pay full benefits for over 30 years, and to continue paying over 70% of scheduled benefits after that, long into the future. Only paying 70% of promised benefits, however is not acceptable.

AARP is committed to working with the White House, Congress, and others to find a balanced solution to strengthen Social Security for both today’s and tomorrow’s retirees. Some proposals that we support include:
The goal of reform must be strengthening and improving Social Security’s guaranteed benefits. It is also critical not to look at strengthening Social Security in isolation – we must examine the other pillars of a secure retirement, including pension and savings, health care insurance, and opportunities for continued employment.

• Diversifying a part of the Social Security Trust Fund investments to gain higher returns without adding individual risk
• Raising the amount of a person’s annual wages that are subject to the payroll tax from the current cap of $97,500 to perhaps $150,000 over a period of several years
• Adding allnewly hiredstate and local employees to Social Security. This was done for federal government works, with a carefully planned transition, in 1983. The change-over has proven beneficial by adding the Social Security foundation to their (optional) Civil Service pension and their “Thrift Savings Plan,” which functions like a 401(k).

I hope this information is helpful to you. Thank you again for contacting us. It is important for us to hear from our members. Please do not hesitate to get in touch with us if there is anything AARP staff can do to be of service in the future.

Sincerely,

June R. Williams
Specialist
Member Communications