Is it Really a Happy Birthday for Social Security?

Published in Woonsocket Call on August 23, 2015

With the stroke of his pen, over 80 years ago, on August 14, 1935, President Franklin D. Roosevelt signed the Social Security Act into law. Over the last eight decades, this domestic program has become one of the most popular federal programs, paying $848 billion to 59 million beneficiaries at the end of calendar year 2014. During that year, an estimated 166 million people had earnings covered by Social Security and paid taxes.

Celebrating the 80^th birthday of Social Security over two weeks ago, AARP released the results of its anniversary survey. The August 2015 survey followed earlier surveys conducted during previous milestone anniversaries in 1995 (60^th), 2005 (70^th) and 2010 (75^th). The latest 29 page report found that Americans of all ages continue to have strong feelings of support for Social Security, and this latest survey found several key themes.

According to the national survey of adults detailed in “Social Security 80^th Anniversary Survey Report: Public Opinion Trends,” Social Security remains a core part of retirement security, it also remains popular across the generations and political ideologies.

“As we celebrate Social Security on its 80^th anniversary, our survey found that it remains as important as ever to American families,” said AARP CEO Jo Ann Jenkins. “We also found that although most want to continue living independently as we age, obstacles to saving often continue to occur in our lives. However, Social Security continues to help generation after generation to diminish these obstacles.”

“When it comes to how important Social Security is to Rhode Islanders, the numbers speak for themselves,” said AARP Rhode Island State Director Kathleen Connell. “210,975 is the number of Social Security beneficiaries in the state; 23.7% say that Social Security provides 90% or more of their total income. And about half say that Social Security represents 50% or more of their income. Without Social Security, many retirees would be living below the poverty line.

“It is plain to see that protecting this key earned benefit is critical. A recent AARP survey found 68% of respondents express at least some concern that they won’t have enough savings to last their lifetime. Imagine if they are given reason to worry more about the viability of Social Security. People who are working toward retirement need to make themselves heard and – as we approach the 2016 elections – hold politicians to their promises to protect Social Security.”

Social Security Key to Surviving Old Age

Older American’s look to rely on their Social Security checks to pay bills, say the researchers. Four in five adults (80%) rely or plan to rely on Social Security benefits in a substantial way. Survey respondents (33%) say that Social Security is the source of income that they rely on or plan to rely on most during their retirement years.

The study finding’s reveal that Social Security has broad support, even across political ideologies and America’s generations, too. Sixty six percent believe that this domestic program is one of the most important government programs when compared to others. This view has remained consistent over time in similar AARP anniversary surveys taken in 1995, 2005, and 2010. According to the study, the vast majority of Americans (82%) also believe it’s important to contribute to Social Security for the “common good.”

Like aging baby boomer and seniors, even younger Americans value this program. Specifically, nine in ten adults under 30 (90%) believe Social Security is an important government program, and nearly nine in ten (85%) want to know it will be there for them when they retire.

The survey respondents also want to live independently in their communities at home. The findings indicate that four out of five adults (83%) consider it extremely important to have the ability to stay at home as long as they want; although 64% believe they won’t be able to do so as they age and become frail. Additionally, while 68% feel it extremely important to have family around, 80% want to be able to financially take care of themselves so their children and other relatives won’t have to support them financially.

While recognizing the importance of financial planning, survey respondents say they face a multitude of challenges that keep them from effectively putting away money for their retirement. Specifically, 69% note that they must focus their income on current financial needs, while 47% believe they do not have enough money left over to put into their retirement savings after paying their monthly bills. Survey respondents (39%) says health issues and family problems keep them from saving for retirement.

SS Trustee Report Gives Nation a Warning

The six member Social Security Board of Trustees issued its 2015 report, on July 22, giving the nation a snapshot of the fiscal health of the nation’s retirement and disability program.

Within the 257 page report, the Trustees gave a dire warning to Congress. “Taken in combination, Social Security’s retirement and disability programs have dedicated resources sufficient to cover benefits for nearly two decades, until 2034. However, the projected depletion date for the separate Social Security’s Disability Insurance (DI) Trust Fund is only a little more than one year away, in late 2016,” says the widely anticipated federal report. “After the DI trust fund exhaustion, annual revenues from the program’s dedicated payroll and taxation of Social Security benefits will be sufficient to fund about three-quarters of scheduled benefits through 2089.”

According to the Social Security Administration, there were about 10.4 million Americans who received benefits from the DI Trust Fund in 2014, including roughly 42,429 in the Ocean State. In order to qualify, these beneficiaries are required to have worked in a job covered by Social Security, and must have been unable to work for a year or more due to a disability. If Congress fails to act to direct more funding into the DI trust fund, disabled workers throughout the nation and in Rhode Island will be hit hard financially right in their wallets.

AARP CEO Jo Ann Jenkins offered her observation about the released Social Security Trustees report. “While the Trustees once again report that the combined Old Age, Survivor and Disability Insurance Trust can pay full retirement, survivor and disability benefits for approximately two more decades, we know that if no action is taken, benefits will be cut by nearly 25% in 2034. As the campaign season gets underway, we will be urging all Presidential candidates to share their plans for the long term solvency and adequacy of Social Security.”

Democrats are calling for an easy fix to shoring up the DI Trust Fund, specifically shifting a small percentage of the Social Security payroll tax from the retirement fund to the disability trust fund. This has occurred 11 times in the past with bipartisan support. But, with the 2016 presidential elections now catching the attention of politicos, GOP Senators have threatened to block any transfer of funds, charging that following this strategy is just a way to push the political “hot potato” issue down the road. Political observers say that this year’s Republican opposition to quickly fixing the DI Trust Fund is a way to force Democrats to the negotiation table to get concessions on higher Social Security payroll taxes or to cut program benefits.

Now, it’s time for Congress to pull together to fix the ailing Social Security program to ensure its future solvency and to adequate fund the DI Trust Fund. Lawmakers from both sides of the aisle must stop their political bickering and craft a compromise to keep Social Security’s retirement and disability trust funds well-funded and up and running for years to come. For the sake of older Americans who now rely on their meager Social Security benefits to survive, our elected federal elected officials must begin to act like Statesmen not simple-minded politicians. Hopefully, the voters will push for this change in thinking when they go into the polls in 2016.

Survey: Older Americans Puzzled About LTC Programs and Services

Published in Woonsocket Call on July 19, 2015

Planning for your golden years is key to aging gracefully. But, according to a new national survey looking at experiences and attitudes, most Aging Boomers and seniors do not feel prepared for planning or financing their long-term care for themselves or even their loved ones.

This Associated Press (AP)-NORC (NORC) Center for Public Affairs Research study, funded by The SCAN Foundation, explores a myriad of aging issues, including person-centered care experiences and the special challenges faced by the sandwich generation. These middle-aged adults juggle their time and stretching their dollars by providing care to their parents, even grandparents while also financially assisting their adult children and grandchildren.

Older American’s Understanding of LTC

This 21 page survey report, released on July 9^th, is the third in an annual series of studies of Americans age 40 and older, examines older Americans understanding of long-term care, their perceptions and misperceptions regarding the cost and likelihood of requiring long-term care services, and their attitudes and behaviors regarding planning for possible future care needs.

The survey’s findings say that 12 percent of Americans age 40 to 54 provide both financial support for their children and ongoing living assistance to other loved ones. Federal programs are often times confusing to these individuals, too. More than 25 percent are unsure whether Medicare pays for ongoing living assistance services like nursing homes and home health aides. About 1 in 4 older Americans also overestimate private health insurance coverage of nursing home care.

Researchers noted that about half of the respondents believe that a family member or close friend will need ongoing living assistance within the next five years. Of those who anticipate this need, 7 out of 10 reports they do not feel very prepared to provide care, they note.

More than three-quarters of those surveyed age 40 or older who are either receiving or providing ongoing living assistance indicate that their care includes at least one component of “person-centered care.” This approach allows individuals to take control of their own care by specifying preferences and outlining goals that will approve their quality of life.

The survey also finds that most of those reporting believe that features of “person-centered care” have improved the quality of care

Paying for Costly LTC Services

The 2015 survey findings are consistent with AP-NORC survey findings from previous years, that is older Americans continue to lack confidence in their ability to pay the costs of ongoing living assistance. Medium annual costs for nursing homes are $91,260; the cost for at-home health is about half that amount, $45,760, says the report.

Finally, only a third of the survey respondents say that they have set aside money for their care. More than half report doing little or no planning at all for their own ongoing living assistance needs in their later years.

“The three surveys on long-term care [by AP-NORC] are helping us create a comprehensive picture of what Americans 40 and older understand about the potential need for these critically important services,” said Director Trevor Tompson, at the AP-NORC Center in a statement. “Experts estimate that 7 in 10 Americans who reach the age of 65 will need some form of long-term care, and our findings show that many Americans are unprepared for this reality,” he says.

Dr. Bruce Chernof, President and CEO of The SCAN Foundation, says that the 2015 study takes a look at public perception regarding long-term care and most importantly, how people can plan for future long-term care needs. “The insight provided by this research is critical because it will help us promote affordable health care and support for daily living, which are essential to aging with dignity and independence.” he says.

AP-NORC’s 2015 study results are validated by other national research studies, says AARP Rhode Island State Director Kathleen Connell. “AARP’s research, both nationally and state by state, reveals that people in the 50+ population are concerned about the cost of retirement and especially long-term care,” she says, observing that “very few people seem worry free on this question and rightfully so.”

Beginning the Planning Process

Connell adds, “I would say our response to this survey is that it adds to the awareness that people need to start thinking about this at an earlier age. And that means not only focusing on saving but also getting serious about health and fitness.”

What can a person do to better prepare for paying for costly long-term care and community based services? “AARP.org has an abundance of information on long-term care. There’s advice on long-term care insurance, a long-term care cost calculator and many other resources. We also need to remain strong as advocates for programs that support seniors. Social Security, Medicare and Medicaid need to remain strong in order to support Americans entering the most vulnerable chapters of their lives,” she says.

Amy Mendoza, spokesperson for the American Health Care Association (AHCA), a Washington, DC-based trade association that represents over 12,000 non-profit and proprietary skilled nursing centers, assisted living communities, sub-acute centers and homes for individuals with intellectual and development disabilities, calls for increased conversations to help planning for potential future need. “Given that the need for long-term or post-acute care is a life changing event, it demands some considerable thought, discussion and research,” says Mendoza.

“AHCA’s “Care Conversations” program helps individuals have the honest and productive discussions needed to plan and prepare for the future long-term care needs,” adds Mendoza. Care Conversations has a Planning Tools page on its website which provides information on advance directives. Learn more at: http://careconversations.org/planning-tools.

Todd Whatley, a certified elder law attorney, notes that some of his best clients are middle age adults who after taking care of their parents want to avoid costly nursing home or community based care services. “They are then suddenly very interested in some type of [insurance] coverage for the extraordinary expense of long term care when a year earlier, they had no interest whatsoever,” he says.

Whatley, President-Elect of the Tuscan, Arizona-based National Elder Law Foundation, suggests contacting a financial planner or Certified Elder Law Attorney when purchasing long term care insurance, “Get early advice from someone with their best interest at heart. There are many times that a person simply doesn’t need this product financially, but most people do.

To locate a Certified Elder Law Attorney, contact Lori Barbee, Executive Director, National Elder Law Foundation. She can be reached at 520-881-1076 or by email: Lori@nelf.org.

For a copy of the study, go to http://www.longtermcarepoll.org/Pages/Polls/long-term-care-2015.aspx.

Herb Weiss, LRI ’12 is a Pawtucket-based writer covering aging, health care and medical issues. He can be reached at hweissri@aol.com.

Rhode Island Lawmakers Poised to Give Retirees Financial Tax Relief

Published in Woonsocket Call on May 31, 2015

During the 2014 legislation session, Rep. Robert E. Craven, (District 32) introduced and successfully pushed for passage in the General Assembly. This legislative proposal would ultimately being signed into law by the Governor. Little did the North Kingston law maker realize that door knocking to get reelected in last November’s election would give him an issue to tackle on Smith Hill this year.

At hundreds of homes, he heard the same issue from his older constituents. One such comment was etched sharply in Craven’s memory: “You’re a nice guy, buy I am not going to vote for you because I am leaving the state, the older voter told him. The puzzled lawmaker asked “why?” The response, “We decided the state is so expensive to live in because of taxes we’re going to sell our house and move to Florida. Wanting the specifics, Craven asked, what specific tax bothers you? “We are only of a few states that tax social security benefits, that’s the straw that broke the camel’s back,” said the older voter.

Craven’s legislative proposal, H 5000, was heard Wednesday night before the House Finance Committee. Strongly supported by House leadership, he says, the legislation would ease the tax burdens on Rhode Island retirees by exempting them from paying state income tax all Social Security benefits as well as income received from federal, state and local government retirement plans, disability benefits, military pensions and private pension plans and deferred-compensation plans.

Among its more than 40 co-sponsors are Rep. Stephen M. Casey (D-Dist. 50, Woonsocket), Rep. Michael A. Morin (D-Dist. 49, Woonsocket), Rep. Samuel A. Azzinaro (D-Dist. 37, Westerly) and Rep. Cale P. Keable (D-Dist. 47, Burrillville, Glocester).

If enacted, Rhode Island would join 27 other states – including Massachusetts and Maine – and the District of Columbia that specifically exempt Social Security income from taxation. (Although Rhode Island does not specifically tax Social Security benefits, that income is identified on federal tax returns. Since Rhode Island’s income tax is based on the federal adjusted gross income of federal tax form filers, the end result is that Rhode Island generates a portion of its income tax collections from Social Security benefits.)

According to Craven, his legislative proposal would financially benefit Rhode Island seniors who receive retirement benefits. ”After paying into the Social Security system their entire working lives, or putting a little money away into private pension plans, or working at jobs that provide them with a pension, it doesn’t seem right that retirees are having taxes eat away at benefits they depend on for their very livelihood,” he says.

“Retirees living on a fixed income are probably more severely impacted by taxes and tax increases than other population groups,” observes Craven. “If we are committed to helping retirees have a safe and secure life in their later years, and if we want to help seniors afford to stay in Rhode Island rather than moving to more tax-friendly locations, we need to ease their financial burdens. Exempting retirement income from the state income tax is one step we should take,” he adds.

Tax Exemption in House Budget

Weaving its way through the legislative process Craven ultimately expects his legislative proposal to be modified to not give older tax payers a complete exemption on paying taxes for their social security income. Specifically, the revised language would say, “If your house hold income is under $100,000 or less than your Social Security is tax exempt from state income taxation.”

While a Senate companion measure has been introduced by Senator Walter S. Felag, Jr., representing Bristol, Tiverton and Warren, an amended H 5000 will be placed in the House Budget because of its cost, says Craven.

The price tag could be between $30 and $35 million, Craven says, noting that better than expected revenues enable it to be funded. “It’s a priority to the state’s economic recovery, he says.

Older retirees, making from $35,000 to $100,000, from Social security and their pensions, will just put their dollars in the local economy, adds Craven. “It’s a good investment and we owe it to them. These retirees have been here all their lives, he says, noting that they ask very little for benefits from municipalities. “They have a lot of time on their hands to volunteer [in their communities] and are very philanthropically included in offering money and services to charities.”

Says House Speaker Nicholas Mattiello, “Representative Craven’s bill to exempt the state tax on Social Security will be included as part of the budget that the House Finance Committee will be considering within the next few weeks. Governor Raimondo included this exemption for low-wage earners in her original budget proposal, but the House will be broadening it to assist the middle-class retirees as well. The House budget exempts retirees, age 65 and over, who have income thresholds of up to $80,000 for individuals and $100,000 for joint tax filers.”

“We believe that by incorporating Rep. Craven’s bill into the budget, this will begin to stop the exodus of retirees leaving Rhode Island for many other states where there is no state tax on Social Security benefits,” adds Mattiello.

Gov. Gina M. Raimondo sees Social Security is a key source of income for older Rhode Islanders, noting that her submitted March budget proposal eliminates state taxes on Social Security benefits for low and middle income seniors “to help them make ends meet and stimulate our economy.”
With Rhode Island unions hit hard by the state’s recent pension reform, Craven’s proposal has received thumbs up from some.

James Parisi, field representative and lobbyist for the Rhode Island Federation of Teachers and Health Professionals, says his union supports Craven’s legislative proposal. “Unlike some other tax cut proposals introduced this session, his bill includes state and local government pension benefits. About half of the state’s teachers were never eligible to participate in social security so any tax cut proposal that is limited exclusively to social security benefits would be unfair to thousands of retired public school teachers,” he says.

Jim Cenerini, a lobbyist for Council 94, AFSCME also says his union is squarely behind H 5000. “Council 94 believes that legislation deserves careful consideration and support because: many other states provide some type of income tax exemption to retirement benefits/Social Security; in 2014 Kiplinger ranked Rhode Island as one the least tax friendly states for retirees; and since a significant majority of public employees remain in Rhode Island, and contribute to our local economy by spending on goods and services, it’s important to provide an incentive to remain in-state.”

A Final Note…
Other legislation proposals have also been thrown into the legislative hopper this session to protect older taxpayers. H 5446, introduced by Woonsocket law maker Rep. Stephen M. Casey, would protect the pocket books of retired teachers who are receiving a pension from Massachusetts. “These retirees, whose pension are overseen by Massachusetts Teachers Retirement System, are essentially double taxed because of the state’s tax code,” he says.

On Friday, May 29, the Rhode Island Public Expenditure Council (RIPEC) issued a report noting that the state may have significantly more funds available in fiscal 2015 and 2016 than anticipated when Gov. Raimondo submitted her budget in March. Specifically, state revenues are expected to be up by $106.8 million this year and $36.6 million next year, with additional funds available from expenditure reductions.

For this writer, its sound public policy to use some of the anticipated surplus identified in RIPEC’s report to enact H 5000 and H 5446 to lessen the tax burdens of Rhode Island’s retirees. As mentioned earlier, older taxpayers pull less resources from their cities and towns. But, most important, these retirees have greatly contributed to the quality of life in their communities throughout their working years.

Herb Weiss, LRI ’12, is a Pawtucket-based writer covering aging, health care and medical issues. He can be reached at hweissri@aol.com.