AARP National GROW Accounts Poll September 8, 2005 Copyright© by AARP, 2005 AARP Knowledge Management 601 E Street, NW Washington, DC 20049 Reprinting with Permission AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, www.aarp.org. AARP Foundation is our affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. 2 AARP National GROW Accounts Poll September 8, 2005 Executive Summary In August 2005, AARP conducted a poll to assess the general public’s opinion on a proposal for GROW accounts. A national sample of 1,051 adults age 18 and older completed the poll. The poll asked people to consider some positive as well as some negative arguments regarding key components of the GROW accounts proposal. This report highlights the national polling data. The survey methodology is described at the end of this report. A tabulated questionnaire and a description of the GROW accounts proposal used for the poll is appended. Key Findings Two-thirds of respondents (66%) oppose the GROW accounts proposal. Slightly less than one- third of respondents (32%) favor it. In fact, findings suggest the intensity of opposition to the GROW accounts proposal is much greater than the intensity of support for it. Change in Support A majority of respondents would switch their support to opposition for the GROW accounts proposal if it meant the following: - Does nothing to improve the long term financial situation of Social Security (75% drop support). - Requires the federal government to borrow large sums of money (69% drop support). - Money would only be put into their GROW account for 11 years- when the surpluses would end (60% drop support). - Social Security benefits would be reduced by the amount of money put into their GROW account (60% drop support). Change in Opposition Only a minority of respondents would switch their opposition to support for the GROW accounts proposal if it meant the following: - Did not affect the Social Security benefits of people ages 55 and over (25% drop opposition). - Used the Social Security surplus money for private accounts instead of other federal spending (24% drop opposition). - Offered a few low risk stock and bond funds, thus limiting investor risk (20% drop opposition). Over 4 in 10 respondents (45%) reported they would be less likely to vote for a 2006 congressional candidate who supported the proposal for GROW accounts; 41 percent reported it would not make a difference; and 11 percent reported this would make them more likely to vote for this candidate. 3 AARP National GROW Accounts Poll September 8, 2005 In August 2005, AARP conducted a poll to assess the general public’s opinion on a proposal for GROW accounts.1 A national sample of 1,051 adults age 18 and older completed the poll. The poll asked people to consider some positive as well as some negative arguments regarding key components of the GROW accounts proposal. This report highlights the national polling data. The survey methodology is described at the end of this report. A tabulated questionnaire and a description of the GROW accounts proposal used for the poll is appended. Findings Overall View of GROW Accounts A description of the proposed GROW accounts was presented to respondents.2 Exactly two-thirds of respondents (66%) oppose the GROW accounts proposal (see Figure 1). Slightly less than one-third of respondents (32%) favor this proposal. The percentage of those who strongly oppose the GROW accounts proposal (33%) is nearly nine times the percentage of those who strongly favor it (4%). These findings suggest that the intensity of opposition to the GROW accounts proposal is much greater than intensity of support for it. This conclusion is reinforced by the findings reported in Tables 1 and 2 showing the change in support or opposition to the proposal when respondents were presented with factors that could influence their views. Figure 1 (n=1,051) Overall support for GROW accounts proposal 100% 90% Strongly 80% Somewhat 70% 60% 50% 33% 40% 4% 30% 20% 33% 28% 10% 0% Oppose Favor 1 This proposal was introduced as HR3304 by representatives Jim McCrery and Clay Shaw. GROW is an acronym for Growing Real Ownership for Workers 2 See Appendix “A” for a description of the GROW Accounts proposal presented to respondents. 4 Exposure to Positive and Negative Arguments In order to test the strength of opinion respondents who favored the GROW accounts proposal (32%) were exposed to negative arguments related to the proposal and respondents who opposed the proposal (66%) were exposed to positive arguments. These findings are presented below in Tables 1 and 2. Supporters Exposed to Negative Arguments Respondents who reported they somewhat favor or strongly favor the GROW accounts proposal were presented with some negative arguments related to GROW accounts. This group of respondents was asked if they would maintain or change their support for GROW accounts after reading each negative argument presented in the survey. Over 7 in 10 respondents (75%) would switch their support to opposition if the GROW accounts proposal does nothing to improve the long term financial situation of Social Security (see Table 1). Approximately 7 in 10 respondents who initially supported the GROW accounts proposal would switch their support to opposition if the proposal required the federal government to borrow large sums of money (69%). Six in ten initial supporters (60%) would now oppose the proposal if money would only be put into their GROW account for 11 years- when the surpluses would end. Similarly, 6 in 10 respondents (60%) who initially supported the GROW accounts proposal would switch their support to opposition if their Social Security benefit would be reduced by the amount of money put into their GROW account. More than half of initial GROW account supporters (53%) would switch to opposition if the accounts would not be available to people ages 55 and over who are still working and contributing to Social Security. Furthermore, 46% of respondents who initially supported the proposal for GROW accounts would switch their support to opposition if it required the creation of a new government agency. 5 In Table 1, all of the negative arguments are presented. Next to each argument is the percentage of respondents who still support the GROW accounts proposal after reading the negative argument and next to that is the percentage of respondents who now oppose the GROW accounts proposal after reading the negative argument. Table 1 GROW Accounts (n= 333) Supporters of GROW accounts were asked: Would you still Still Support Now Oppose support or now oppose this proposal if…? 4_1.) If: This plan does nothing to improve Social Security’s long 25% 75% term financial situation? 4_2.) If: Money could be put into your private account for only 11 40% 60% years because the annual surpluses end? After 11 years no more money would be put into your account. 4_2a.) If: You knew your Social Security benefit would be reduced 40% 60% by the amount put into your private account? 4_2b.) If: The proposed accounts would not be available to 47% 53% people ages 55 and over who are still working and contributing to Social Security? 4_3.) If: Creating these new private accounts require the federal 31% 69% government to borrow large sums of money (approximately 900 billion dollars)? 4_4.) If: Creating private accounts will require the creation of a 54% 46% new government agency to administer the accounts? 6 Opponents Exposed to Positive Arguments Respondents who reported they either somewhat oppose or strongly oppose the GROW accounts proposal were presented with a number of positive arguments related to GROW accounts. This group of respondents was asked if they would maintain or change their opposition to GROW accounts after reading each positive argument presented in the survey. Regardless of the positive arguments presented to respondents who oppose the GROW accounts proposal no more than one-quarter of respondents (25%) changed from opposition to support GROW accounts (see Table 2). One-quarter of respondents (25%) who initially opposed the GROW accounts proposal would change their opinion to support the proposal if it would not affect the Social Security benefits of people ages 55 and over. Additionally, if the GROW accounts proposal used the Social Security surplus money for private accounts instead of other federal spending 24% of respondents who initially opposed GROW accounts would change their opposition to support. If the GROW accounts proposal offered a few low risk stock and bond funds, thus limiting investor risk, 20% of initial opponents would then support it. If the proposal offered Treasury bonds for 3 years but thereafter offered mutual fund investments 16% of respondents would switch their opposition to the proposal and instead support it. In Table 2, all of the positive arguments are presented. Next to the positive arguments, in each row, is the percentage of respondents who still oppose the GROW accounts proposal even after reading the positive argument and next to that is the percentage of respondents who now support the GROW accounts proposal after reading the positive argument. Table 2 GROW Accounts (n= 685) Opponents of GROW accounts were asked: Would you Still Oppose Now Support still oppose or now support this proposal if…? 3_1.) If: This proposal would use the Social Security 76% 24% surplus money for private accounts instead of other federal spending? 3_2.) If: For the first 3 years workers will have to invest in 84% 16% Treasury bonds but after 3 years workers will be allowed to invest in mutual funds? 3_3.) If: Private account investments are going to be limited 80% 20% to a few lower risk stock and bond funds, thus limiting a person’s risk of losing money? 3_4.) If: The proposed accounts would not affect the Social 75% 25% Security benefits of people ages 55 and over? 7 Paired Comparisons Respondents were presented with three pairs of statements about private accounts and asked to choose the statement they agreed with more. Three-quarters of respondents (75%) agreed more with the statement “even though private accounts let me invest part of the Social Security surplus, I do not think that they are a good idea if it will cost the federal government about 900 billion dollars,” while one-fifth of respondents (20%) agreed more with the statement “even though the newly proposed accounts will cost the federal government about 900 billion dollars, I do think it is still a good idea to fund private accounts using the Social Security surpluses”. Five percent had no opinion (see Figure 2). Figure 2 (n=1,051) Are GROW accounts a good idea or bad idea when the cost is considered? 20% 75% Good idea Not a good idea 5% Don't know Slightly more than 6 in 10 respondents (62%) agreed more with the statement “private accounts will mean cuts in guaranteed Social Security benefits so severe that money earned in a private account will not make up the difference,” while 34 percent agreed more with the statement “even though private accounts will mean cuts in guaranteed Social Security benefits, they will let me make a lot more money for retirement” (see Figure 3). Four percent of respondents had no opinion. Figure 3 (n=1,051) Will the returns from private accounts lead to more money for retirement or not? 62% 34% Money will More not be money for made up Ret. 4% Don't know 8 Additionally, 61% of respondents agreed more with the statement “I will not have more choices because the government will restrict how I invest my Social Security taxes to a few safe mutual funds,” while 35 percent of respondents agreed more with the statement “investing the Social Security surplus in private accounts will give me more choice about how my retirement funds are invested” (see Figure 4). Four percent of respondents had no opinion. Figure 4 (n=1,051) Investments in private accounts will give me more choice or not? 61% Will be 35% restricted Will give me more choice 4% Don't know Influence on Voting Intentions Respondents were asked how a congressional candidate’s support for Social Security surplus private accounts would influence their vote in the 2006 congressional elections. Over 4 in 10 respondents (45%) reported they would be less likely to vote for this candidate; 41 percent reported it would not make a difference; and 11 percent reported this would make them more likely to vote for this candidate (see Figure 5). Three percent had no opinion. Figure 5 (n=1,051) A congressional candidate’s support for Social Security surplus private accounts would make you: 42% 45% Not make a Less likely to difference vote for this candidate 11% More likely to 3% vote for this Don't know candidate 9 Methodology The data for this study were collected by Knowledge Networks a national survey research firm. The data collected comes from a national sample of adults age 18 and older. The survey was fielded between August 30th and September 5th, 2005 using the Knowledge Networks web- enabled panel, which provides a representative sample of U.S. households.3 In total, 1,051 respondents completed the AARP poll for the study. The final post-stratification weights were produced using benchmarks representative of the U.S. population. This national poll has a sampling error of plus or minus 3 percentage points. This means that in 95 out of 100 samples of this size, the results obtained in the sample would fall in a range of 3 percentage points of what would have been obtained if every adult in the United States had been polled. For presentation purposes, percentage points have been rounded off to the nearest whole number. As a result, percentages in a given table column may total slightly higher or lower than 100%. For questions that permit multiple responses, columns may total to significantly more than 100%, depending on the number of different responses offered by each respondent. Similarly, when only selected responses are shown, percentages may total less than 100%. 3 The Knowledge Networks probability panel is designed to be representative of the U.S. population. Initially, participants were chosen scientifically by a random selection of telephone numbers. Persons in selected households were then invited by telephone to participate in the web-enabled panel. Those who agreed to participate were sent an Internet appliance and received an Internet service connection provided by Knowledge Networks. In some cases, people who already had computers and Internet service were permitted to participate using their own equipment. Panelists then received unique log-in information for accessing surveys online, and then were sent emails three-to-four times a month inviting them to participate in research. 10 Annotated Questionnaire GROW Accounts Proposal Survey August- September 2005 (n=1,051) Q1. Prior to reading the previous paragraphs did you know that the federal government borrows the annual Social Security surplus to spend on other government programs? Total 1. Yes 42% 2. No 58% As you may know, some in Congress have recently proposed using money from the Social Security surplus to fund private accounts. This is a new proposal to create private accounts that differs from President Bush’s proposal for private accounts. President Bush’s proposal diverts money directly from Social Security taxes to private accounts. This new proposal borrows an amount equal to the annual Social Security surplus to fund private accounts. This new proposal for private accounts includes the following: • Borrows an amount equal to the annual surplus money from the Social Security Trust Fund to fund the accounts • Creates private accounts for all workers less than 55 unless they choose not to participate • Establishes a new federal agency to manage and administer the private accounts • Invests money in private accounts for 11 years. After this time the annual Social Security surpluses will be gone. • Private accounts are inheritable - they can be passed on after death. Q1a. How familiar were you with this new proposal for private accounts prior to taking this survey? Total 1. Very familiar 3% 2. Somewhat familiar 16% 3. Not too familiar 28% 4. Not at all familiar 53% Q2. How much do you favor or oppose this new proposal that uses the Social Security surplus to fund private accounts? Total 1. Strongly favor 4% 2. Somewhat favor 28% 3. Somewhat oppose 33% 4. Strongly oppose 33% 5. Refused 3% 11 Q3_1. Would you still oppose or would you now support this proposal if… …this proposal would use the Social Security surplus money for private accounts instead of other federal spending? Of those who oppose private accounts (685 of 1051 cases) 1. Still oppose proposal 76% 2. Now support proposal 24% Q3_2 Would you still oppose or would you now support this proposal if… …for the first 3 years workers will have to invest in Treasury bonds but after 3 years workers will be allowed to invest in mutual funds? Of those who oppose private accounts (685 of 1051 cases) 1. Still oppose proposal 84% 2. Now support proposal 16% Q3_3 Would you still oppose or would you now support this proposal if… …private account investments are going to be limited to a few lower risk stock and bond funds, thus limiting a person’s risk of losing money? Of those who oppose private accounts (685 of 1051 cases) 1. Still oppose proposal 80% 2. Now support proposal 20% Q3_4. Would you still oppose or would you now support this proposal if… … the proposed accounts would not affect the Social Security benefits of people ages 55 and over? Of those who oppose private accounts (685 of 1051 cases) 1. Still oppose proposal 75% 2. Now support proposal 25% 12 Q4_1. Would you still support or would you now oppose this proposal if… …this plan does nothing to improve Social Security’s long term financial situation? Of those who support private accounts (333 of 1051 cases) 1. Still support proposal 25% 2. Now oppose proposal 75% Q4_2 Would you still support or would you now oppose this proposal if… …money could be put into your private account for only 11 years because the annual surpluses end. After 11 years no more money would be put into your private account. Of those who support private accounts (333 of 1051 cases) 1. Still support proposal 40% 2. Now oppose proposal 60% Q4_2a Would you still support or would you now oppose this proposal if… you knew your Social Security benefit would be reduced by the amount put into your private account? Of those who support private accounts (333 of 1051 cases) 1. Still support proposal 40% 2. Now oppose proposal 60% Q4_2b Would you still support or would you now oppose this proposal if… … the proposed accounts would not be available to people ages 55 and over who are working and still contributing to Social Security? Of those who support private accounts (333 of 1051 cases) 1. Still support proposal 47% 2. Now oppose proposal 53% 13 Q4_3 Would you still support or would you now oppose this proposal if… …creating these new private accounts require the federal government to borrow large sums of money (approximately 900 billion dollars)? Of those who support private accounts (333 of 1051 cases) 1. Still support proposal 31% 2. Now oppose proposal 69% Q4_4 Would you still support or would you now oppose this proposal if… …creating private accounts will require the creation of a new government agency to administer the accounts. Of those who support private accounts (333 of 1051 cases) 1. Still support proposal 54% 2. Now oppose proposal 46% General Q5. If Congress did not pass any Social Security legislation before the 2006 Congressional elections, how upset or not upset would you be? Total 1. Very upset 13% 2. Somewhat upset 39% 3. Not upset at all 48% Q7. Please select the statement you agree with more. Total 1. Even though private accounts will mean cuts in guaranteed Social Security benefits, they will let 34% me make a lot more money for retirement. 2. Private accounts will mean cuts in guaranteed Social Security benefits so severe that money 62% earned in a private account will not make up the difference. Refused 4% 14 Q8. Please select the statement you agree with more. Total 1. Investing the Social Security surplus in private accounts will give me more choice about how my 35% retirement funds are invested. 2. I will not have more choices because the government will restrict how I invest my Social 61% Security taxes to a few safe mutual funds. Refused 4% Q9. Please select the statement you agree with more. Total 1. Even though the newly proposed accounts will cost the federal government about 900 billion 20% dollars, I do think it is still a good idea to fund private accounts using Social Security surpluses. 2. Even though private accounts let me invest part of the Social Security surplus, I do not think that they 75% are a good idea if it will cost the federal government about 900 billion dollars. Refused 5% Q15. If a candidate for Congress from your Congressional district supported legislation that would use Social Security surplus money to create private accounts, would you be more likely to vote for that candidate in the 2006 election, less likely, or wouldn’t it make any difference? Total 1. more likely to vote for that candidate in the 2006 11% election 2. less likely to vote for that candidate in the 2006 45% election 3. it would not make any difference 41% Refused 3% 15 Demographics Party ID 1. Republican 36% 2. Independent/Other 24% 3. Democrat 40% Political Ideology 1. Extremely liberal 3% 2. Liberal 12% 3. Slightly liberal 10% 4. Moderate, middle of the road 41% 5. Slightly conservative 13% 6. Conservative 18% 7. Extremely conservative 3% Who did you vote for in 2004 Presidential election 1. Bush 41% 2. Kerry 38% 3. Nader 2% 4. Other candidate / 14% did not vote 5. Refused 7% AARP Membership 1. Yes, AARP member 20% 2. No, not AARP member 80% Age Group 1. 18 – 24 12% 2. 25 – 34 18% 3. 35 – 44 23% 4. 45 – 54 16% 5. 55 – 64 16% 6. 65 – 74 10% 7. 75 + 6% Education Categories 1. Less than high school 16% 2. High school 32% 3. Some college 27% 4. Bachelor’s degree or higher 26% 16 Gender 1. Male 48% 2. Female 52% Employment status 1. I work as a paid employee 53% 2. I am self-employed 6% 3. I am owner/partner in small 2% business or firm 4. I work at least 15 hours a 0% week w/out pay in family business or farm 5. I am unemployed, 7% temporarily laid off, but looking for work 6. I am retired 15% 7. I am a homemaker 9% 8. Other 3% Race/Ethnicity White 70% Black 11% Hispanic 12% Other, non-Hispanic 3% 2 + races 3% Religion 1. Baptist 18% 2. Protestant 25% 3. Catholic 21% 4. Mormon 1% 5. Jewish 1% 6. Muslim 0% 7. Hindu 1% 8. Buddist 0% 9. Pentecostal 4% 10. Eastern Orthodox 0% 11. Other Christian 11% 12. Other non-Christian 4% 13. None 14% 17 Church Attendance 1. More than once a week 12% 2. Once a week 22% 3. Once or twice a month 11% 4. A few times a year 20% 5. Once a year 14% 6. Never 22% Financial Planner 1. Primary financial planner 38% 2. Another household member 50% and I share decisions 3. Another household member 12% makes most financial decisions Marital Status 1. Married 56% 2. Single (never married) 27% 3. Divorced 10% 4. Widowed 6% 5. Separated 2% Metropolitan Area 1. Non-metro 17% 2. Metro 83% 18 APPENDIX A Description of the GROW Accounts Proposal Presented to Respondents As you may know, some in Congress have recently proposed using money from the Social Security surplus to fund private accounts. This is a new proposal to create private accounts that differs from President Bush’s proposal for private accounts. President Bush’s proposal diverts money directly from Social Security taxes to private accounts. This new proposal borrows an amount equal to the annual Social Security surplus to fund private accounts. This new proposal for private accounts includes the following: • Borrows an amount equal to the annual surplus money from the Social Security Trust Fund to fund the accounts • Creates private accounts for all workers less than 55 unless they choose not to participate • Establishes a new federal agency to manage and administer the private accounts • Invests money in private accounts for 11 years. After this time the annual Social Security surpluses will be gone. • Private accounts are inheritable - they can be passed on after death. 19