Category: Social Security

Congress keeps Social Security from spending its own money to administer benefits effectively
It’s bad enough that Congressional leaders want to cut Social Security benefits. But did you know that Congress also is keeping Social Security from spending its own money to administer benefits effectively? Earlier this month, the Senate Appropriations Committee refused to allow the Social Security Administration (SSA) the $13.067 billion it needs–less than 1 percent of its budget–“to execute critical service delivery efforts” and ensure people have appropriate access to benefits.

Instead, the Senate Appropriations Committee cut SSA’s administrative budget by 5.5% or $600,000. According to SSA, this means a serious cut in customer service, jeopardizing and delaying people’s access to benefits. To be crystal clear, the money the Appropriations Committee is denying SSA is SSA’s money, expressly for use by SSA, not general revenue.

What exactly are the members of the Senate Appropriations Committee thinking? The Acting SSA Commissioner describes Social Security’s state of service as “fragile,” in her explanation of why it requires its full budget request. The Committee’s behavior makes no sense; it harms constituents and Social Security’s reputation.

There are 65 million people in the U.S. receiving Social Security or Supplemental Security Income (SSI), up more than 12 percent in the last five years. Yet, Senator Roy Blunt of Missouri, who chairs the Appropriations Committee, and his members, have effectively cut SSA’s administrative budget. It is still $10.5 billion, what it was five years ago, with six million fewer enrollees.

Keep in mind that almost all Social Security applicants are older adults or people with disabilities and many have mental impairments, low literacy levels and speak English as a second language. They often need personalized assistance. And, SSA is not authorized to spend as much funds as are needed to provide it.

Kathleen Romig at the Center on Budget and Policy Priorities reports that in 2016 the typical caller to SSA must wait 15 minutes on hold and 10 percent of callers receive busy signals. Moreover, SSA has been forced to close almost 600 field and mobile offices since 2010, making it harder for people to apply for benefits. While you can apply online, staff at SSA need to do follow-up work for people applying for Social Security Disability Income and Supplemental Security Income. Adequate resources are not available.

People whose applications are denied must now wait more than a year and a half to have their appeals heard, from 360 days in 2010 to 540 days today. Moreover, short-staffed, SSA is typically delaying paying widows benefits four months. The toll on lower income individuals who depend heavily on Social Security benefits to pay their rent, utilities, and for other basic needs can be devastating.

Here’s more from Just Care:
June 23, 2016
Expand Social Security, don’t means test it
Ever since a few weeks ago, when President Obama joined with Bernie Sanders, Hillary Clinton, Elizabeth Warren, Social Security Works and a growing league of policy makers and policy experts calling to expand Social Security, opponents have been pushing back as hard as they can; they want to keep Social Security benefits low; many want to “means test” it and turn it into a welfare program. Make no mistake, expanding Social Security promotes retirement security; means testing Social Security puts it at risk.

Social Security, like Medicare, are earned benefits, not charity programs. They allocate funds equitably, with most benefits going to lower income individuals. The vast majority of Social Security benefits (75 percent) go to individuals with annual incomes of less than $20,000. And, more than 90 percent of benefits go to people with annual incomes under $50,000.

Very little Social Security funding goes to the wealthiest Americans. Dean Baker and Hye Jin Rho at the Center for Economic and Policy Research calculated that just 2.3 percent of Social Security benefits go to individuals with incomes of $100,000 and up, and only 0.6 percent of benefits go to individuals with incomes of $200,000 and up.

Reducing or eliminating Social Security benefits for people of wealthier means–“means testing” Social Security–may sound reasonable in theory, but it would save almost no money if it applied only to the wealthiest Americans. Because so few retirees earn more than $50,000 a year (half have incomes under $24,150), means testing benefits would only create real savings if people earning $30,000 a year saw their benefits fall. And, that would jeopardize retirement security for middle-income earners.

Moreover, Social Security is an insurance program designed to benefit everyone who contributes in it, not a need-based program. As with life insurance, everyone paying in receives benefits, regardless of income. We don’t means test access to public schools because we want to benefit the collective, deliver opportunity to all. Similarly, we don’t means test Social Security because it is a public good that helps deliver financial security.

Social Security gains its strength from being inclusive and protecting everyone who pays in “against the hazards and vicissitudes of life,” as Franklin D. Roosevelt posited. A progressive tax system is a better way to ensure that everyone contributes their fair share, not means testing.

To generate larger Social Security reserves, it makes sense to lift the cap on Social Security contributions so that wealthier Americans pay into Social Security throughout the course of the year, as the overwhelming number of Americans already do, not to cut their benefits.

If opponents of Social Security expansion genuinely want the wealthiest Americans to benefit less from the government, why don’t they support lifting the cap on contributions into Social Security and/or having them contribute to Social Security after they pass and before their heirs benefit from their estate tax exemption? And, why aren’t they calling for means-testing 401(K) contributions or the large housing subsidy we offer homeowners through tax deductions?

To read more about why means testing is a bad idea, click here. Click here to read Dean Baker’s latest piece on Robert Samuelson’s attack on Social Security.

Here’s more from Just Care:
June 16, 2016
Trump now supports Social Security and Medicare cuts
If you watched a Republican debate or attended a Donald Trump rally, you would not think that Trump supports Social Security cuts. Indeed, his position on Social Security distinguished him from his Republican rivals and put him in the same camp as the 83 percent of Republicans who oppose cuts to Social Security. But, as I write in the Huffington Post, now that Trump has clinched the Republican nomination and needs support from the party, he is ready to dismantle Social Security and Medicare.

From Social Security’s birth in 1935, Republicans have opposed the program. They tried to persuade President Eisenhower to abolish it in 1953, but he would not do so. In a private letter, Eisenhower wrote to his brother about those wanting to kill Social Security: “Their number is negligible and they are stupid.”

Who knows where Trump will stand on Social Security in the coming months as he works to curry favor with the electorate. But, chances are, unfortunately, that if elected he will support Paul Ryan and the Congressional Republicans in their desire to dismantle Social Security.

In sharp contrast, both Hillary Clinton and Bernie Sanders are on record as supporting an expansion of Social Security. And, the vast majority of Americans (72 percent) stand with them, along with 75 percent of House Democrats and 90 percent of Senate Democrats. They represent the interest of older adults and their families. This election, with a platform that supports expanding Social Security, the Democratic nominee is likely to get the older adult vote.

Here’s more from Just Care:
May 23, 2016
Is it fair to say we have a retirement crisis?
It is easy to find policymakers and thought leaders who deny we have a retirement crisis. But there’s no denying that the overwhelming majority of people face a sharp drop in income at retirement. The Economic Policy Institute, a Washington think tank, has a new report that highlights how middle-income families have lost significant assets since the Great Recession.

The EPI analysis shows that today fewer people have defined benefit pensions to rely on. And Social Security payments are not replacing as much of people’s working income as it once did. Moreover, 401k-style defined contribution plans and IRAs, are not growing nor anywhere near making up for these losses. They have “failed most American workers.”

Rather, EPI reveals that the households near retirement during the Great Recession took a significant financial hit. On average, they lost nearly a quarter of their savings. But, these losses hurt the wealthiest Americans far less than everyone else, contributing to greater retirement inequality. Median families (those in the 50th percentile) lost more than half of their retirement savings between 2007 and 2010. Families in the 90th percentile only lost 5 percent.

Other notable findings from EPI:
- Total wealth has shrunk for 80 percent of people over the last several decades. So, they do not have as much available to spend for retirement.
- Most people at the bottom half of the income distribution have no retirement savings; since 2000, fewer working age families have retirement savings except among top income earners.
- Single women are particularly vulnerable because they tend to earn less, have less savings and live longer than men, often outliving their savings.
- Half of near-retirees have no retirement savings at all and those with savings have median savings of $17,000. Before the recession, they had more than twice that amount, about $36,000.
- Retirees are also seeing cuts to Social Security benefits, which were passed in 1983 but are still taking effect in the form of a slowly rising retirement age, from 65-67.
And, because older adults and people with disabilities typically can count on Medicare to cover only about half of their health care costs, their expenses can be very high. Medicare does not cover nursing home care or other long-term services and supports.

What’s the solution? Here are three ways government can help promote retirement security. Expanding Social Security benefits would help a lot, particularly for people with low incomes and in poor health.Teresa Ghilarducci explains the value of Guaranteed Retirement Accounts here. People who are in good health and who can find work are best off if they continue working and put off collecting Social Security until age 70. Their benefits will increase substantially.
March 10, 2016
Millionaires pay into Social Security just a few weeks each year

Wealthy Americans pay much less into Social Security as a proportion of their earned income than middle-income Americans. Indeed, millionaires contribute only a tiny fraction of their annual earned income to Social Security; they pay into Social Security just a few weeks a year. The Center for Economic and Policy Research has developed a calculator to show how relatively little wealthy people contribute.

People who make $1,000,000 a year stopped paying into Social Security on Valentine’s Day, February 14, 2016–just six weeks into the calendar year. Only 11.9 percent of their annual income is subject to the Social Security tax. And, their effective Social Security tax rate is just 0.7 percent.

In sharp contrast, the overwhelming majority of people in the United States, make under the Social Security cap of $118,500 and contribute into Social Security throughout the entire year. The full amount of their income is subject to the Social Security tax. And, their effective tax rate is 6.2 percent.

If millionaires contributed the same proportion of their earned income to Social Security as people earning $118,500 and less, they would be paying $54,653 more than the $7,347 they currently pay. And, it would be one way to strengthen and expand Social Security.

To check out the Center for Economic and Policy Research Social Security tax calculator, click here.

People with lower incomes don’t only pay a higher percent of their earned income into Social Security than wealthy people. If they claim Social Security benefits early, it disproportionately hurts them. And, did you know that hundreds of thousands of people receiving Social Security benefits are still paying back student loans?

Here are three ways government could help promote retirement security in the U.S.

To learn how income inequality in America has meant less money for Social Security, read Teresa Ghilarducci’s post on Just Care here. And, Nancy Altman writes on Just Care about why it’s time for people receiving Social Security to get a raise here.

March 2, 2016
Social Security would have all the money it needs were there greater income equality

Social Security would have all the money it needs were there greater income equality in the United States. Put differently, the majority of working people have contributed less than expected to Social Security because their earnings have not grown as quickly as the highest earning Americans or as quickly as the federal government had projected. Had people’s wages increased more evenly, Social Security would be adequately funded.

When Social Security funding was being considered back in the late 1970s, there was not the same degree of income inequality as there is today. Wage increases were far more uniform across the workforce. So, it made sense that a cap on Social Security contributions would deliver adequate funding to Social Security.

But, since 1979, the top one percent of wage earners have seen a 138 percent growth in earnings as compared to a 15 percent growth for the bottom 90 percent. This inequality in earnings means less money has been contributed to Social Security than otherwise. Many more people than projected have been earning less than the cap, which is now $118,500.

Contributions to Social Security are uneven as a percentage of people’s incomes. All of the six percent of working people in the U.S. who earn more than $118,500 stop making Social Security contributions early in the calendar year. The top 10,000 earners with annual incomes of $4 million can stop contributing in their first week of work (after earning $118,500) since they pay the same amount as people making $118,500. Their contributions to Social Security as a portion of their income are small relative to the vast majority of workers, who contribute into Social Security throughout the year.

Eliminating the cap to correct for inequality in payments and simply requiring a Social Security contribution on all earnings as there is with the Medicare contribution would provide Social Security with the funding it needs for the next 75 years.

For a more detailed explanation of how income inequality has left Social Security underfunded, you can read my recent article in The Atlantic. Click here to learn more about why it’s time to build on Social Security’s success. And, watch this Robert Reich video to learn why we can afford to expand Social Security. Several organizations have joined forces to expand Social Security in 2016. To sign their petition, click here.

And, click here for, “How To Retire With Enough Money and How to Know What Enough is? “ my new book about how to plan for retirement (and generally manage your money). It is also a bit funny, short, and cheap.

January 29, 2016
Social Security: It’s time to build on its success

Social Security is a model government program, financed by and supporting working families in the event of retirement, disability, and death. It is administered in a wise and cost-effective manner. Social Security can only pay out what it has in its coffers. It cannot spend more than it has. Now, it’s time to build on its proven success.

In August 1953, President Eisenhower proposed an expansion of Social Security, telling Congress that “Retirement systems, by which individuals contribute to their own security according to their respective abilities . . .are but a reflection of the American heritage of sturdy self-reliance which has made our country strong and kept it free . . . The Social Security program furnishes, on a national scale, the opportunity for our citizens, through . . .self-reliance, to build the foundation for their security.”

Contrary to what you might hear from some pundits, our nation can afford our current level of Social Security. In fact, we can afford a greatly expanded Social Security. America is the wealthiest country in the world. The question of whether to expand Social Security is simply about our priorities, not about whether we have the funds to do so.

Congress and the President should agree with President Nixon that “the retired, the disabled and the dependent [beneficiaries of Social Security] never again bear the brunt of inflation. The way to prevent future unfairness is to attach the benefit schedule to the cost of living.” And, in 1972, Congress passed legislation to index Social Security in order to prevent inflation from eroding its earned benefits. Unfortunately, while in theory Social Security’s benefits should not erode over time, in practice they do.

The inflation adjustment measure for Social Security does not comport with the spending patterns of older adults and people with disabilities. People who receive Social Security tend to spend more on health care, whose costs have been rising far faster than overall inflation. As a result, while costs for Social Security beneficiaries have risen in the last year, there is no Social Security cost of living adjustment in 2016. The formula needs to change. And, there are some bills in Congress that would change it.

Historically, Republicans and Democrats alike have worked together to improve and expand Social Security. President Reagan signed into law the Social Security Amendments of 1983 and spoke about “our nation’s ironclad commitment to Social Security.” It’s time that Congress pass Social Security legislation which expands benefits while requiring the wealthiest among us to pay their fair share. That should, reassure Americans, as Reagan said, “that America will always keep the promises made in troubled times a half a century ago.”

It is time for Social Security beneficiaries to receive a raise and for the wealthiest Americans to start paying their fair share. If you agree, sign this joint Social Security Works and Credo Action petition.

Watch Robert Reich explain why we can afford to expand Social Security. Click here to learn about why claiming Social Security benefits early disproportionately hurts people with low incomes. Click here to read why higher Social Security benefits helps memory and mental functioning for older adults.

January 12, 2016
Claiming Social Security benefits early disproportionately hurts people with lower incomes

A GAO report analyzing the characteristics of people who claim Social Security benefits early raises two questions that deserve far more attention than they get: 1. Should people claiming Social Security benefits early–at age 62–be receiving higher benefits to compensate for shorter life expectancies? and 2. Doesn’t raising the age at which people claim Social Security disproportionately hurt blue-collar workers?

According to the Government Accountability Office, people claiming Social Security early typically have significantly lower incomes than people who wait until they are 66 to claim full benefits. A higher proportion of people in blue-collar jobs and people without a college education claim these benefits early than other Americans. The penalty they accept for claiming benefits early is a 25 percent reduction in benefits for the rest of their lives. As it is Social Security benefits in the US are stingier than in most other wealth countries.

The Social Security benefit cut for these early claimants can seriously jeopardize their retirement security. They often rely primarily or exclusively on Social Security for their income. Their reduction in benefits stems from a calculation that is intended to equalize the benefits Social Security delivers to an individual based on the age at which that person claims Social Security. Assuming people with lower paying jobs lived to the same age on average as people with higher paying jobs, it would.

But, the government calculation intended to equalize benefits based on when people elect Social Security discriminates against lower income workers who claim benefits early. Essentially, they are paid lower benefits because they are expected to receive four years more of benefits than people who claim benefits at 66. More often than not, however, they don’t enjoy more years of benefits. People with blue-collar jobs and without a college education typically live shorter lives—typically 5.8 years fewer–than the top half of Americans. The government calculation does not take into consideration this significant difference in life expectancy between these lower income workers and higher income workers.

Adjusting Social Security benefits based on people’s income levels and life expectancies would be fairer than the current system, but it would be difficult to execute in practice. However, reducing benefits for blue-collar workers who don’t live as long as white-collar workers and who depend more heavily on their Social Security benefits in retirement threatens their retirement security.

Bringing the eligibility age for Social Security back down to 65, rather than raising the eligibility age up from 67 would help people with lower incomes in retirement. However, it would increase Social Security expenses and still would not compensate blue-collar workers with shorter life expectancies. Raising the age of eligibility for Social Security, as some are advocating, would only make it that much harder for lower-income workers to manage financially in retirement and further discriminate against them.

Strengthening Social Security, so it allows people at all income levels to retire with dignity should be a government priority. Expecting people to work longer until they can claim full Social Security benefits sounds good in theory, but delaying retirement and working longer is only an option for people lucky enough to have jobs or in good enough health to perform the jobs available to them. As we know, many people with low incomes in blue collar jobs struggle to keep them into their 60s. And, when there are jobs available for them, they can be physically taxing and not jobs they can perform any longer.

The best solution for treating people with lower incomes more fairly would be to increase Social Security benefits for people with lower incomes in a progressive way. If we expand Social Security benefits as many members of Congress are now calling for, it would be easy to design the increase to disproportionately go to those with the lowest earnings. Our retirement policy should focus on ending what amounts to discrimination against a large cohort of people with lower incomes, not aggravating the discrimination through raising the retirement age.

If you’d like to understand what your retirement benefits will be when you retire, click here. If you’d like to read more about how to strengthen Social Security, click here. Polls show that a strong majority of Americans support strengthening Social Security. And, if you’re interested in reading more about the growing inequality gap for older adults, read Theresa Ghiraducci’s Senior Class: Americas Unequal Retirement in the American Prospect.

December 12, 2015
Social Security: Government Should Protect and Expand Benefits, Not Pocket Them

Did you know that you are a trust fund baby? You probably don’t realize that the expression “trust fund baby,” slang for people who have had money put in trust for their economic security, applies to you, but it does.

Money held in trust is especially valuable because it cannot be reached by creditors. If you are delinquent on your credit card payments, a portion of your salary can be garnished — deducted from every one of your pay checks and paid directly by your employer to your creditor, without your permission. All the creditor needs is a court order. But that is not true if the income comes from money held in trust for you. That money is beyond the creditor’s reach. That is true of your trust fund, as well.

What is this trust fund of yours? Social Security. Your Social Security benefits are held in trust for you. Like other trust fund income, the money paid to you when you claim your Social Security benefits is shielded from creditors. Let a credit card company go to court to try to get a portion of your Social Security benefit. The case will be thrown out immediately.

Financial institutions and other creditors can seize your wages and bank accounts with a court order. But, like other trust income, these institutions cannot seize your Social Security trust fund benefits. Your Social Security is beyond the reach of all your creditors. All your creditors, that is, with one shocking exception. One entity, designed to protect you, can grab your Social Security if you owe it money. That entity is the federal government.

Since 1996, thanks to the Debt Collection Improvement Act, the federal government now has the power to garnish a portion of your Social Security benefits for the repayment of federal student loans, Veterans Administration home loans, food stamp overpayments and the like. And our government has been making use of this new power. Let’s look just at student loans.

The nation is facing a student loan crisis. When once young adults could emerge from college with manageable debt, now they are often saddled with enormous debt. Indeed, nearly one out of two millennials, those born between 1980 and 2000, carries student debt. The amounts owed to creditors for student loan debt is skyrocketing, as the following chart shows.

Many see student debt as a young person’s problem, but it affects all generations. People ages 65 and older owe $18.2 billion on student loans. People ages 75 and older owe around $2 billion on outstanding student loans. As the population ages, the amounts owed by those age groups are increasing rapidly.

Some of this debt is decades old, incurred when those older people sought higher education or retraining for themselves. Some is the result of co-signing loans to help their children and grandchildren. About 90 percent of nongovernment student debt — loans made by private banks or other private financial institutions — must be co-signed and the co-signers are generally parents and grandparents.

It doesn’t matter how good the reason for the loan or how dire the burden; if the loans can’t be paid off, they will follow you into retirement, and literally, to the grave. Student debt cannot easily be discharged in bankruptcy, despite great hardship.

Student loans owed by seniors are much more likely to be in default than student debt held by younger Americans. In 2013, for example, twelve percent of federal student loans held by those aged 24 to 49 were in default. In contrast, 27 percent of federal student loans held by those aged 65 to 74 were in default. For those aged 75 and older, the default was more than 50 percent!

That’s where Social Security comes into play. If the student loan was made by a private bank or other financial institution, your Social Security is safe. But beware, if the loan is a government loan. A portion of the Social Security benefits you earned can be grabbed without your permission. And it is happening at alarming rates. The number of retirees and people with disabilities who have a part of their modest Social Security benefits seized by the government to pay off student loans has tripled since 2008. 156,000 Social Security beneficiaries are currently having their earned benefits garnished to pay for college debt. And their number is projected to grow dramatically in the future, as the cost of education continues to balloon and the population ages.

Recognizing how vital Social Security is for beneficiaries, the 1996 legislation protected a portion of it. After all, almost two-thirds (64.6 percent) of elderly beneficiaries rely on Social Security for half or more of their income. One-third rely on those modest but vital benefits for virtually all of their income. Consequently, the 1996 law requires the government to leave beneficiaries at least $750 a month ($9,000 a year). Monthly income of $750 doesn’t go very far. It didn’t go very far in 1996, and the amount has not been increased for twenty years, since the law was enacted.

It’s long past time to overturn the wrong-headed 1996 legislation and restore the protected status of Social Security trust fund payments. That’s why, back in October, we joined with our allies to gather 375,000 signatures demanding a moratorium on the garnishment of Social Security benefits, and delivered them to the U.S. Department of Education.

Important members of Congress recognize this wrong-headed policy and are seeking to change the law. Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, has just introduced, with 6 cosponsors, S.2387, the Protection of Social Security Benefits Restoration Act. This bill would repeal the 1996 legislation altogether, so Social Security benefits could no longer be garnished to repay student loans, Veterans Administration home loans, overpayments of food stamps and other federal benefits.

In the House of Representatives, Congressman Raúl Grijalva (D-AZ), co-chair of the Congressional Progressive Caucus, has introduced, with nineteen cosponsors, the Stop Social Security Garnishment for Student Debt Act of 2015 (H.R. 3967) which would end the power of the government to garnish your Social Security benefits to repay federal student loans. And, in the event that Congress does not do the right thing and end garnishment of Social Security, Representative Ted Deutch (D-FL) has introduced the Social Security Garnishment Modernization Act of 2015 (H.R.3747), which would index the exempt amount, now at $750, to inflation.

These visionary leaders should be applauded and supported. In addition to facing a student debt crisis, the nation is facing a looming retirement income crisis. Too many Americans fear that they will never be able to retire, while maintaining their standards of living. We should be expanding Social Security to address this crisis, not worsening it by garnishing benefits.

An election year is a moment of accountability. I urge those of us who are concerned about the student debt crisis and the retirement income crisis demand that those seeking our vote endorse the Wyden, Grijalva, and Deutch bills. It is time to restore to Social Security the important safeguard available to all other trust fund income and available to Social Security beneficiaries for its first sixty years.

When we created Social Security, eighty years ago, we enshrined in law that Social Security benefits would be inviolable. We earn our benefits as we work and they need to be there for us and our families when and if we become disabled, die, or reach old age. We should be secure in the knowledge that our earned Social Security benefits will be paid in full and on time. Congress should not have treated the people’s trust fund differently from all other trust funds and opened Social Security up to any creditor. Now is the time for Congress to step up, admit it was wrong, and correct its mistake.

December 11, 2015
Sen. Warren introduces law that would increase Social Security benefits in 2016

Senator Elizabeth Warren introduced the Seniors and Veterans Emergency (SAVE) Benefits Act today. If passed, people receiving Social Security benefits, veterans and others would get $581 more in 2016. This one-time payment is equal to 3.9 percent of the average Social Security annual retirement benefit.

In 2016, older adults and people with disabilities are not receiving any increase in their Social Security benefits. The proposed additional payment is designed to match the 3.9 percent average CEO pay increase last year.

Senator Warren proposes to fund the one-time payment by ending the CEO performance pay tax break. That will cover the cost of this payment and help extend the life of the Social Security Trust Funds.

If Congress were to require the Social Security Administration to base Social Security cost of living increases on the Consumer Price Index for the Elderly, which far more accurately reflects increases to retirees’ costs, people receiving Social Security benefits would see an increase in 2016.

November 5, 2015