Nearly Half of Seniors Receiving Lower Social Security Checks in 2011

/PRNewswire/ -- Forty-four percent of seniors are receiving lower Social Security checks this year compared to 2010, while even more are dealing with significantly higher expenses. The findings come from an annual survey of elderly Americans, released earlier today by The Senior Citizens League (TSCL), one of the nation's largest nonpartisan senior citizens advocacy groups.

Of seniors receiving lower checks, one in four report receiving at least $50 less per month, and one in nine are receiving at least $100 less per month.

At the same time, nearly two-thirds of seniors (61 percent) estimate their expenses have increased by at least $80 per month compared to last year.

Social Security checks are lower because many seniors have their Medicare Part D or Medicare Advantage premiums automatically deducted, and these premiums have increased in many cases. An annual Cost of Living Adjustment (COLA) typically offsets such premium increases, but seniors are not receiving a COLA for the second year in a row.

"The combination of lower benefits and higher expenses means many more seniors will have a hard time making ends meet this year," said Larry Hyland, chairman of The Senior Citizens League. "More of them will have to make very difficult choices and cut back on basic things such as health care and utilities."

Almost 70 percent of beneficiaries depend on Social Security for 50 percent or more of their income. Social Security is the sole source of income for 15 percent of beneficiaries.

TSCL supports emergency COLA legislation and opposes any deficit reduction proposals that would cut the COLA.

SURVEY METHODOLOGY: The survey was conducted through print and electronic surveys from December 13, 2010, through January 31, 2011. It had 1,253 Social Security recipients. Full survey results are available on request.

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Study: Recession Will Cost Baby Boomers Up To $40,000 in Social Security Benefits

/PRNewswire/ -- Baby Boomers will see greatly reduced Social Security benefits over the course of their retirements due to an unprecedented combination of low wage growth and no annual cost-of-living adjustments (COLA), according to a new study by The Senior Citizens League. And those who first become eligible for Social Security in 2011 will receive lower benefits than retirees born a year earlier.

This is the most comprehensive study ever released to show the recession's impact on Social Security benefits for the first wave of baby boomers.

It found that the combination of rapidly slowing wage growth and no COLA is shrinking the normal increases in initial retirement benefits. An inequity will also be created: people born in 1949 (who turn 62 next year) will receive lower benefits than retirees with similar work histories born just one year earlier. Moreover, the lack of a COLA will reduce lifetime Social Security benefits by as much as $40,000 for many retirees with average earning histories (reductions will be felt regardless of the age at which people begin claiming benefits, and some higher-earning seniors stand to lose even more).

Recent wage and consumer price trends – two of the key factors in determining Social Security benefits – have combined to form a "perfect storm" for the first wave of Baby Boomers. Since the start of the recession, average wage growth has plummeted, and there will be no COLA in 2011 for the second year in a row.

Under normal economic conditions, the initial benefits of each succeeding birth year tend to be slightly higher than the previous birth year as wages rise over time. But average wage growth has been slowing since the 1980s and has dropped markedly since 2008.

Furthermore, low inflation (a situation that government economists expect to continue) led to no COLA in 2010 and 2011. The loss of the compounding effect of a COLA on lifetime benefits is high, and grows the longer a senior spends in retirement. Seniors who turn 62 during the years of no COLA are hit with the full brunt of the compounding loss and stand to lose the most.

Aggravating the situation is the fact that, although general inflation is low, seniors' living costs have increased, especially due to rising Medicare premiums.

Lifetime Social Security Benefits an Average Senior Will Lose Due to No/Low COLAs(1)

Year of Birth	62-Year-Old Retiree	66-Year-Old Retiree
1946	-$30,163.60	-$39,152.50
1947	-$31,436.10	-$39,463.20
1948	-$20,871.00	-$26,130.60
1949	-$8,908.90	-$11,141.30
1950	-$2,229.20	-$2,880.90
1951	-$463.00	-$648.70

(1) Low COLA is defined as less than 2.8 percent, which is the average COLA paid from 1975 through 2009. This chart shows how much low or no COLA will affect benefits over a 20-year (for those retiring at age 66) or 25 year (for those retiring at age 62) retirement.

"Large numbers of seniors will be at risk of outliving their retirement income and being pushed into poverty due to an unprecedented combination of economic factors," said Larry Hyland, chairman of The Senior Citizens League. "The Senior Citizens League is adamantly opposed to deficit reduction proposals that would cut COLAs. Instead, Congress needs to pass an emergency COLA provision or guarantee a minimum average COLA to prevent this disturbing erosion in Social Security benefits."

The Senior Citizens League also recommends that any legislation that changes how Social Security benefits are calculated is devised in a way that is fair to all, to prevent inequities between retirees close in age.

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Treasury Department Proposes End to Checks for Federal Benefits

/PRNewswire/ -- Under new regulations proposed by the Treasury Department, Americans who receive federal benefits like monthly Social Security and Supplemental Security income will no longer be able to get these funds by check. Instead, beneficiaries will have to switch to electronic payments, either by having funds deposited directly into their accounts or onto a prepaid debit card issued by the government.

In comments filed with the Treasury Department, Consumers Union urged the agency to allow consumers to continue receiving their benefits by check and to limit the fees and improve the customer service associated with the Direct Express prepaid card for those consumers who choose this option.

"Electronic payments are not safer, easier, and more convenient than checks for all types of benefit recipients," said Michelle Jun, Staff Attorney for Consumers Union, the nonprofit publisher of Consumer Reports. "Consumers should be able to choose the option that is best for them, including paper checks. And if the government is going to encourage benefit recipients to use prepaid cards, it should do more to limit the fees charged for using them and make them easier to use."

The Treasury Department has received numerous comments from consumers who have raised concerns about the switch to electronic payments. Those comments and Consumers Union's concerns are summarized in the letter linked below:

http://www.defendyourdollars.org/FINALCmt31CFR208_8.9.10.pdf

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Direct Deposit Push Exposes Social Security Recipients to Bank Payday Loans

/PRNewswire/ -- The federal government's push to require all recipients of Social Security and other benefits to receive payments by direct deposit will expose many seniors to predatory payday loans made by banks.

That's the conclusion of "Runaway Bandwagon: How the Federal Government's Push for Direct Deposit of Social Security Benefits Has Exposed Seniors to Predatory Bank Loans," a new report issued by the National Consumer Law Center.

"Treasury must stop banks from making these high-cost, short-term loans to Social Security recipients," said Margot Saunders, an attorney with NCLC and an author of the report. "These loans are only made because they are fully secured by a borrower's next direct deposit of federal funds."

"While federal law protects Social Security and other benefits from seizure by creditors, banks regularly take those benefits as repayment for what are essentially payday loans that they have made without even assessing borrowers' ability to afford those loans," Saunders added.

"Runaway Bandwagon" spotlights account advance loan products - some with Annual Percentage Rates as high as 1,800% - that some banks offer to customers with checking accounts or prepaid debit cards. Banks help themselves to funds from customers' accounts to repay loan principal and fees, so that these loans closely resemble both fee-based overdraft programs and payday loans.

"With these loans, banks profit from vulnerable and hard-pressed recipients of federal benefits, trapping them in a cycle of mounting debt and high borrowing costs," said Leah Plunkett, an attorney with NCLC and an author of the report. "In effect, these high-cost loans are used to hijack benefits federal law intends to provide for the basic needs of elderly and disabled citizens."

More seniors and vulnerable benefits recipients will become the targets for such loans as the Treasury Department moves forward with its plan to require electronic payments to all federal benefit recipients by 2013. New protections are needed to prevent the victimization of seniors and other vulnerable consumers and preserve income from Social Security and other social insurance programs that many seniors depend upon for survival.

Treasury must ensure that when accounts used for benefit deposits are used to secure loans, those loans are made only after an evaluation of the borrower's ability to afford repayment, carry APRs including fees of no more than 36%, have a term of at least 90 days or one month per $100 borrowed and allow repayment in multiple installments. Treasury must also prohibit banks and other lenders from requiring borrowers to provide as security electronic access to a bank account. Borrowers who do allow lenders such access must be permitted to end that access at any time and at no cost.

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Tax Reminder: A Big Portion of Your Long Term Care Insurance Premiums May Be Deductible

/PRNewswire/ -- Want to keep more of your money in these challenging times? Then check with your tax advisor if you have long term care insurance. You may be able to deduct a big chunk of your 2009 premiums. What if you don't have long term care insurance? Then consider getting it NOW to lock in tax benefits next year. Uncle Sam may in effect pick up the tab for much of your premiums for 2010. This reminder comes from LTC Financial Partners LLC (LTCFP), one of the nation's most experienced long term care insurance agencies.

"For the 2009 tax year, an individual with a qualified policy may be able to deduct up to $3,980, depending on age," says Cameron Truesdell, CEO of LTCFP. "For a couple, the maximum amount doubles, to nearly $8,000." According to the Internal Revenue Service, for individuals the amounts of long term care insurance premiums that are deductible as medical expenses in 2009 can be as high as --

-- $3,980 if you're 70 or over
-- $3,180 if you're over 60 but not over 70
-- $1,190 if you're over 50 but not over 60
-- $600 if you're over 40 but not over 50
-- $320 if you're 40 or under



"Those who don't have policies, but want them, can set themselves up for substantial deductions next year," Truesdell says. For individuals, the amounts deductible as medical expenses in 2010 can be as high as --

-- $4,110 if you're 70 or over
-- $3,290 if you're over 60 but not over 70
-- $1,230 if you're over 50 but not over 60
-- $620 if you're over 40 but not over 50
-- $330 if you're 40 or under



"These deductions are not a one-time thing," Truesdell says. "They recur. You can take them each and every year that you pay premiums; and the deductible limits have been increasing annually."

Truesdell strongly urges individuals and companies to investigate ALL the tax advantages that may be available to them. Additional potential benefits, beyond the above federal deductions, include --

-- If your state offers tax deductions or rebates, and you qualify, these
are additive to your federal deduction, if you qualify.
-- When a policy is designed to pay on a per-diem basis, a limited
portion of the benefits may be excluded from taxable income.
-- When a policy is paid for out of a Health Savings Account (HSA), there
can be tax advantages.
-- For businesses, there are tax breaks that can be especially
attractive. For example, opportunities exist for some business owners
to deduct premiums without having to satisfy the 7.5% medical expense
threshold amount.



"With so much government support, we often wonder why more people don't get LTC policies," says Truesdell.

LTCFP does not offer tax advice but teams up with accountants and other tax experts to help their clients get all the deductions or other benefits available to them. "We've formed strategic alliances with banks, accountants, other financial advisors and tax preparers, and organizations such as the National Association of Estate Planning Attorneys," says Truesdell.

How can you make sure you don't miss out? "Ask your tax expert to check into every deduction that may apply in your case," Truesdell advises. "We're glad to help. We'll consult with anyone's accountant, tax attorney, or other advisor -- now or closer to the tax deadline." In Truesdell's national organization, hundreds of experts are available by phone or Internet. Requests for help, at no charge, may be made at http://www.ltcfp.us/ltcfp/taxbreaks.htm.

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Government Stops Unlawful Social Security Suspensions; Agrees to Repay More Than Half a Billion in Back Benefits

/PRNewswire/ -- The Social Security Administration has agreed to repay more than $500 million in benefits that were unlawfully withheld from 80,000 people since January 2007. The agreement is part of a class action settlement preliminarily approved by U.S. District Court Judge Claudia Wilken today. In addition, people whose benefits were suspended or denied between 2000 and 2006 will be notified of the new policy and invited to re-establish eligibility. All told, more than 200,000 people may have benefits reinstated and/or receive back payments through the settlement. All beneficiaries must continue to be eligible to receive payments.

The settlement resolves a lawsuit, Martinez v. Astrue, challenging SSA's method of implementing a provision of the Social Security Act. The law seeks to prevent people from using government benefits to flee from arrest. Rather than trying to determine which Social Security recipients were actually fleeing prosecution, SSA used an automated system that matched names in warrant databases to those at SSA. Many of the automatic benefit suspensions involved false or unproven allegations, minor infractions or long-dormant arrest warrants. Although regulations provide for an appeal process, individuals losing benefits were routinely informed by SSA staff that they could not appeal.

Under the agreement, SSA has stopped, as of April 1, 2009, suspending or denying benefits due to the mere existence of a warrant - unless the warrant is issued in a criminal proceeding on a charge such as flight or escape.

"The vast majority of class members were not fleeing at all; many never knew that criminal charges were pending against them, let alone that a warrant had been issued," Gerald McIntyre, attorney with the National Senior Citizens Law Center, said.

In addition to granting preliminary approval of the settlement agreement, Judge Wilken ordered a final fairness hearing to be held on September 24. At that hearing, Judge Wilken will hear any objections from class members and determine whether to approve the agreement, which will not take full effect until the appeal time has run.

The plaintiffs in the case are represented by the National Senior Citizens Law Center, pro bono counsel from the law firm of Munger, Tolles & Olson, the Mental Health Project of the Urban Justice Center, Disability Rights California, and the Legal Aid Society of San Mateo County.

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