Social Insecurity

Meanwhile, we learn of another item in the inventory of Americandependence:Social Security. Americans are overwhelmingly dependent on theirgovernment to support them in their old age - even millionaires. "Indeed, 41 percent of older couples and 33 percent of singles wouldexperience a living standard reduction of 90 percent or more were SocialSecurity benefits eliminated," says a recent study. "A surprising finding is the major dependency of very high-incomehouseholds on Social Security. Take the highest earning couple in ourstylized sample. This couple earns $500,000 per year from age 30 throughage 64 when it retires. It enters retirement with over $2.3 million inassets. But given the length of its potential retirement, the modest realreturn it can safely earn on its assets, its off-the-top housing expenses, and its tax payments, this household is highly dependent on Social Security benefits, notwithstanding their taxable status. Indeed, were this household denied all its Social Security benefits on the eve of itsretirement, it would suffer a 35.6 percent reduction in its living standard throughout retirement."