'You've Earned A Say': Seniors asked for opinions about Social Security
By SARAH FAY CAMPBELL
It’s no surprise that Social Security has some funding issues that are likely to cause real problems in the future. And changes to Social Security have been part of negotiations on reducing the federal budget.
But the American Association of Retired Persons wants to know what regular older Americans think about proposed changes to Social Security, and the organization is gathering comments to take to Washington.
It’s part of AARP’s “You’ve Earned a Say” campaign. “You’ve spent your life paying into Social Security and you deserve to know what changes are being discussed so you can have your say,” according to AARP.
Approximately 48 people participated in the event.
David Pilgrem, AARP associate state director for advocacy, led the discussion, and spoke about 12 different proposals that are being considered to help strengthen Social Security. A booklet listing all the proposals, as well as comments on those proposals by The Heritage Foundation and the National Academy of Social Insurance, was made available to attendees.
Social Security benefits are modest, but important. The average annual benefit is only $13,900, said Pilgrem. But Social Security makes up 67 percent of the typical older Georgian’s income, he said.
Low- and middle-income retirees are “even more reliant” on Social Security payments, Pilgrem said. They are typically receiving 78 percent of their total income from Social Security.
Currently, about 13 percent, or 118,426 Georgians, live below the poverty level, Pilgrem said. Without Social Security, “an additional 41 percent of Georgians 65 and older, or 368,000, would fall under that poverty line,” he said.
A big part of the reason there is a funding crunch, of course, is the Baby Boomer generation. Pilgrem said he likes to use the analogy of a bird bath. “There is a little pedestal holding up a bowl. That pedestal is getting smaller and smaller, and holding up a bigger bowl.”
One important thing to know about Social Security is that it is not “broke.” At least not yet.
“Right now, Social Security is solvent. Don’t let anybody say that it is not,” Pilgrem said.
Right now, the system can pay out full benefits for the next 20 years, and 75 percent of promised benefits for the next 75 years. If, that is, the Social Security tax cut that was passed into law two years ago is repealed.
The “payroll tax cut” averages about $25 per pay period, Pilgrem said. “And it is coming directly out of Social Security,” he said. That’s affecting the future solvency of the program. “We’re robbing from Peter to pay Paul.”
“We don’t mind people having tax cuts, but don’t take them from Social Security,” he said.
Each proposal to strengthen Social Security is expected to fill a certain percentage of the “funding gap.” That “gap” is what will keep the program from being able to pay out full benefits in the future.
Talk about the failure of Social Security has been going on for some time. Pilgrem said that he remembered, as a teenager, his father saying he didn’t expect to get Social Security when he retired. His father is now collecting benefits.
Former Coweta County Commissioner Robert Wood said that when he got out of college Richard Nixon was president and there was talk that Social Security was “going to be broke in three to five years.”
“Because of that lie, being an entrepreneur and an accountant, I did things to avoid paying Social Security. And now I’m not getting as much as I could be getting had I done it right,” Wood said. “So Social Security will not go broke if we protect it.”
The first proposal is raising the full retirement age. The full retirement age is currently 66, and will be 67 for those born after 1960. Retirees would still be able to get benefits at 62, but wouldn’t get as much money.
The issue with the retirement age is that people are living longer. “Some states are actually seeing peopleâ ¦ receiving more money than they put in,” Pilgrem said.
When the retirement age was originally set, “that was the life expectancy of people,” Pilgrem said.
One of the proposals is to raise the retirement age two months every year, starting in 2023, until it reaches 68. That move would fill 18 percent of the funding gap.
Another proposal is to raise the age to 70 by 2040. That would fill 44 percent of the funding gap.
When it was first created, Social Security was meant to provide for widows and orphans, said Pilgrem. “It was originally not set up as a retirement account.”
Raising the full retirement age generated the most discussion of all the proposals.
“A lot of places, you reach a certain age and you’ve got to retire,” said one woman. “What do you do with the gap in between? You starve to death,” she said.
“Or you go on welfare,” said another.
“I worked all my life just to get to 62 and 65, and I want my money now,” said another. She asked if there were any elected officials at the event.
No, Pilgrem said. “We don’t ask for them to be here,” he said. The problem with having elected officials is “we’re trying to get your opinion,” Pilgrem said. “A lot of times when elected officials are here they’re giving you their opinion. We want to make sure your voice is being heard.”
“One of the reasons meetings like this are going on throughout the country is because AARP is going to compile all this info,” said Joanne Mathis, an AARP volunteer. “We are taking notes and are going to take it and say ‘these people are your constituents. They are saying these things, so you need to consider that,’’ Mathis said.
Other proposals are:
• Longevity Indexing — would automatically modify Social Security to pay smaller monthly benefits as lifespans increase. Depending on the specific proposal it would fill 20 to 26 percent of the funding gap.
“That is ridiculous” said Simon Rutman.
• Recalculating the cost of living adjustments. There are two ways to adjust the COLA — by using a “chained” consumer price index that accounts for ways consumers change their buying habits when prices change, or using “elderly indexing,” which reflects how elderly Americans spend their money.
Using the chained CPI would fill 23 percent of the gap, while elderly indexing would increase the gap by 16 percent.
• Increasing the payroll tax cap. Currently, Social Security taxes are only paid on the first $110,100 of a person’s income. The cap covers about 84 percent of earnings. When it was first in place in 1977, the cap covered 90 percent of earnings. Raising the cap to $215,000 would cover 90 percent of earnings and would fill 36 percent of the funding gap.
• Eliminating the payroll tax cap. Eliminating the cap would fill 86 percent of the funding gap. High earners would receive very high Social Security payments, as much as $150,000 a year.
Raising or eliminating the cap would hurt the self-employed and some small business owners, according to the Heritage Foundation and “a tax increase only keeps us from reviewing the program and seeing what works and what could be improved.”
• Reducing benefits for higher earners. Reducing benefits for the highest earning 25 percent would fill 7 percent of the funding gap. Reducing benefits for the highest earning 50 percent would fill 31 percent of the gap.
• Benefit improvements. Increasing benefits for surviving spouses, giving earnings credits for people who are not working because they are taking care of a child or other family member, and creating a minimum benefit that is guaranteed to keep low-paid workers with long careers above the poverty level would increase the funding gap by 5 to 13 percent.
• Increasing the payroll tax rate from 6.2 percent (if the current tax cuts are repealed) to 6.45 percent. On a $50,000 salary, that would increase the employee and employer contributions by $125 each, annually. It would fill 22 percent of the funding gap.
Raising the tax gradually to 7.2 percent would fill 64 percent of the funding gap.
• Taxing all salary reduction plans, such as Flexible Spending Accounts, would fill 10 percent of the funding gap.
• Covering all newly hired state and federal workers. Some state and federal workers are covered by pension plans and don’t pay into Social Security. This would fill 8 percent of the funding gap.
• Increasing the number of years used to calculate initial benefits. Currently, benefits are based on a person’s highest-earning 35 years. Increasing it to 38 would fill 13 percent of the gap.
• Begin “means testing” Social Security benefits. This would lower benefits for retirees who have other income. According to the National Academy of Social Insurance, that would “change Social Security from an earned right to welfare.” There would also be higher administration costs as the government would have to check income and assets to adjust benefits. One version of means testing is expected to fill 11 percent of the funding gap.
Barry Reid, Georgia president for AARP, said he went to Washington in June with 150 AARP representatives. They met with senators and congressmen.
“I noticed something I didn’t think would happen — they were paying attention,” he said. “They weren’t necessarily listening to Barry Reid, they were listening to 40 million Americans. And that is what AARP is,” he said. “We need your ideas, we need you to give your input. We’re faithfully documenting it and trying to put it in a narrative and saying this is what 65 plus and 55 plus, what Americans, believe about Social Security,” he said.
Everyone at the program was asked to fill out a short survey about their feelings on changing Social Security.
“Your voices are really being heard,” Pilgrem said.
You can get more information, and fill out your own survey, at www.earnedasay.org .