Some Republicans are considering legislation that would allow people to borrow from their future Social Security benefits to pay for time off from work after they have a baby.
A new analysis by The Urban Institute, a policy research group, finds that such a law could risk sending Americans into retirement with less money.
"This plan seemed too good to be true, and it probably is," said Richard Johnson, director of the program on retirement policy at the Urban Institute.
The details of the paid leave proposal are still thin, but it would allow new parents to take an early withdrawal from their Social Security benefits to pay for 12 weeks off from work after they've had a baby. In exchange, they'd have to agree to defer the collection of Social Security payments later in their life.
This plan seemed too good to be true, and it probably is.ÂRichard Johnsondirector of the program on retirement policy at the Urban Institute
The Independent Women's Forum, a conservative think tank in Washington, D.C., first suggested the paid leave proposal in January. It has since garnered the attention of at least three Republican senators — Joni Ernst of Iowa, Mike Lee of Utah and Marco Rubio of Florida.
"Paid family leave is a vital issue for every young American family," wrote Conn Carroll, Sen. Lee's communication director, in an email. "He is currently working with Senators Rubio and Ernst on turning Independent Women's Forum's policy idea into actual legislation."
The White House did not respond to a request for comment about whether it supports the proposal.
The Urban Institute's analysis found that taking a loan from your Social Security when you're younger could set you back decades later.
Parents who took one 12-week paid leave would have to delay their Social Security checks by around 20 to 25 weeks, the Urban Institute calculated. Such a wait would reduce a person's lifetime Social Security benefits by 3 percent, according to the group's estimate.
That's because Social Security would not be able to recoup its loans from roughly one-quarter of new parents, because they either died before retirement age, received disability insurance or didn't work enough to qualify for the benefits, the institute calculated. And that gap would result in additional costs for other participants.
Those who had more than one child and opted for additional paid leave would see their funds for old age shrink even more. Four 12-week paid leaves, for example, would slash a parent's Social Security payments by about 10 percent, the Urban Institute found.
Others feel the trade-off is worth it.
This voluntary paid leave system would deliver an important benefit to parents without disrupting businesses or burdening taxpayers, said Carrie Lukas, president of the Independent Women's Forum.
"This approach is about reforming our entitlement system to make it more flexible and modern and responsive to the needs of workers today," Lukas said. "It's a way to help people by rationalizing the safety net to give people access when they need it most, rather than expanding government yet again."
Another concern some opponents have is that it may encourage other proposals to tap Social Security for non-retirement needs.
Indeed, another bill recently introduced would offer student debt relief to people who agree to wait longer to collect their Social Security benefits.
"It's like you're borrowing against your IRA to pay for a mortgage," said Kathleen Romig, a senior policy analyst at the Center on Budget and Policy Priorities. "Leakage is already a big problem with 401(k)s and IRAs."
"We don't have a headache with Social Security," she added. "Why add it?"
Leakage is already a big problem with 401(k)s and IRAs. We don't have a headache with Social Security. Why add it?Kathleen Romigsenior policy analyst at the Center on Budget and Policy Priorities
Romig believes paid leave should instead be funded through taxation. "That's how social insurance programs are paid," Romig said.
In a review of more than 180 countries and territories, the International Labour Organization, an agency within the United Nations, found that just two countries don't offer cash benefits to women when they have a baby: Papua New Guinea and the United States.
But the handful of states that have adopted a paid family and medical leave policy — California, New Jersey, Rhode Island and New York — do so through a payroll tax.
The calculus of the proposal would be particularly punishing to women, advocates warn.
"Women will be more likely to dip into their Social Security, because women are still disproportionately family caregivers," said Sarah Fleisch Fink, director of workplace policy at the National Partnership for Women and Families.
And already women receive smaller Social Security checks than men since they earn less throughout their lifetime, Fink said.
"This would just be a further way in which women's retirement security is at risk," she said.
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