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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Reverse Mortgage Proceeds Likely to Decrease October 1

/PRNewswire/ -- Seniors should be informed that the budget proposals working their way through both the House and Senate, as currently drafted, bring a 150 percent increase in annual FHA (Federal Housing Authority) insurance premiums, as well as reductions in available proceeds on FHA-insured HECM (Home Equity Conversion Mortgage) reverse mortgage loans.

"Now is a good time for seniors to take advantage of low rates on reverse mortgages and get the maximum return on the product before the new fiscal year starts this fall," said Jeff Lewis, Chairman of Generation Mortgage Company.

According to Lewis, starting October 1st, both bills will change the HECM value proposition if approved in their current form. "With the upcoming Senate vote, seniors have limited time to take advantage of the current pricing on reverse mortgages," commented Lewis. "Reverse mortgages provide financial independence to thousands of seniors struggling to sustain their retirement. A majority of our borrowers use reverse mortgages to pay off existing traditional mortgages, and free up much-needed income."

In early July, the Transportation Housing and Urban Development, and Related Agencies Appropriations Subcommittee met and provided $150 million in funding for the Federal Housing Administration's reverse mortgage program. The bill passed the full House Appropriations Committee late last month and went to the House of Representatives two weeks ago. In the house, the appropriation was lowered to $140 million, and later passed by a vote of 251 to 167. It is not yet clear when the bill is headed to the Senate.

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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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Consumer Credit Counseling Service of Greater Atlanta to Offer Free Reverse Mortgage Counseling

/PRNewswire/ -- Beginning immediately, Consumer Credit Counseling Service (CCCS) of Greater Atlanta will offer free reverse mortgage counseling sessions nationwide.

The decision comes as a result of a $1.8 million grant from the U.S. Department of Housing and Urban Development (HUD), which was awarded to the national nonprofit counseling agency late in 2009. While most of the agency's other services are offered free to consumers, reverse mortgage counseling has historically required a consumer payment. This new grant funding will allow CCCS of Greater Atlanta to provide more than 12,500 reverse mortgage counseling sessions at no cost through September 2010.

A reverse mortgage (also called a home equity conversion mortgage, or HECM) is a loan that allows a homeowner to convert the equity in their home into tax-free income without having to sell the home, give up the title, or take on a new or additional monthly payment. Instead of making mortgage payments each month, the homeowner can receive income in the form of a lump sum, or as monthly payments. As long as the homeowner lives in the home, pays the property taxes and insurance, and keeps the home in good condition, they will not lose the home.

To be eligible for a reverse mortgage, homeowners must be 62 years of age or older, have paid off their mortgage or have only a small balance remaining, and their home must be their principle residence. In addition, HUD requires consumers to speak with an approved HECM counselor prior to obtaining the loan.

"A reverse mortgage can offer seniors greater financial security," said Suzanne Boas, president of CCCS of Greater Atlanta. "It can be used to supplement social security or meet unexpected medical expenses, allowing seniors to remain in their homes. However, it can be an expensive option, and is not the right solution for everyone."

"We hope seniors across the country will take advantage of this opportunity," Boas continued. "Obtaining this free counseling from a reputable and qualified nonprofit agency will help them understand all aspects of a reverse mortgage loan, and make an informed decision that is best for their unique situation."

HUD requires all reverse mortgage lenders to provide homeowners a list of nonprofit counseling agencies that provide reverse mortgage counseling. CCCS of Greater Atlanta is one of a small number of counseling agencies designated by HUD to provide counseling nationwide.

Seniors can schedule a reverse mortgage counseling session by calling CCCS of Greater Atlanta directly at 866-616-3716, seven days a week, in English and Spanish. Counseling can also be initiated online at www.cccsinc.org/reverse.

All of the agency's reverse mortgage counselors are college graduates, have completed the Home Equity Conversion Mortgage (HECM) qualification exam approved by HUD and participate in reverse mortgage education classes.

To learn more, visit www.cccsinc.org and click on "I'm looking for information on a reverse mortgage" in the "Get Help Now" menu. There you will find a step-by-step guide to evaluating a reverse mortgage as well as helpful resources from organizations such as AARP.

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One in Seven Seniors Faces Social Security Check Cuts in 2010

/PRNewswire / -- Close to seven million seniors -- one in every seven -- will receive a smaller Social Security check next year, according to a new analysis by The Senior Citizens League (TSCL). Millions of other seniors who do not have their Medicare premiums automatically deducted from their checks will also have fewer Social Security dollars leftover next year.

These seniors will be affected because their Social Security Cost of Living Adjustment (COLA) is forecast to be zero next year, while their Medicare Part B (doctors' visits, tests, and outpatient hospital care), Part C (Medicare Advantage) and/or Part D (prescription drugs) premiums are forecast to rise.

Affected seniors generally fall into one of two groups, if not both:

1. MEDICARE PART B: HOLD HARMLESS PROVISION: Approximately three million
seniors will endure cuts because they are not protected by a "hold
harmless" provision that prevents the vast majority of beneficiaries
from receiving smaller Social Security checks in years when Medicare
Part B premiums exceed the COLA. Two groups of seniors will not receive
hold harmless protection in 2010:
a. MEANS TESTING: 2,121,500 beneficiaries who pay higher premiums due
to Part B "means testing." Individuals with adjusted gross incomes
(AGI) above $85,000 and couples over $170,000 are affected.
b. NEW ENROLLEES: 848,000 new enrollees will pay the 2010 premium
rate, forecast by Medicare's Trustees to be $104.20 per month,
instead of the current rate of $96.40 per month that tens of
millions of seniors will continue to pay next year due to hold
harmless.

2. MEDICARE PARTS C & D: More than 3.8 million other seniors will see
smaller Social Security checks next year due solely to likely increases
in Medicare Parts C and D, for which no hold harmless provision exists.
Note: Millions of other seniors will also be affected, as our estimate
includes just those who will have automatic reductions to their Social
Security checks. Additional millions of seniors who pay plans directly
will also have fewer Social Security dollars leftover next year.


"It's bad enough that seniors will have to endure rising costs next year without an increase in their Social Security checks -- but to actually cut checks for millions of seniors in this economy borders on cruelty," said Daniel O'Connell, TSCL chairman. "Our members are already unable to afford their prescriptions, rent, and air conditioning. We simply can't survive year-after-year of cuts."

A majority of those aged 65 and over who receive a Social Security check depend on it for at least 50 percent of their total income, and one in three beneficiaries rely on it for 90 percent or more of their total income.

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Economic Stimulus Package Would Place Social Security Trust Fund in Deficit for First Time Ever Next Year

/PRNewswire-USNewswire/ -- The Congressional economic stimulus plan would place the Social Security Trust Fund into deficit for the first time ever next year, if the current economic stimulus package is passed by both Houses of Congress.

Social Security is funded by payroll taxes that employees and their employers pay into the system. Money that comes into the Social Security Trust Fund is used to pay the Social Security checks retirees receive each month, and since the creation of the Trust Fund in 1983, the program has always had more money coming in than going out.

However, that may change as soon as next year, due to a proposed refundable payroll tax credit which would offer workers a refund on their portion of Social Security taxes, meaning there would be insufficient cash to pay benefits. The $145.3 billion refundable payroll tax credit proposal would give individual workers up to $500 and couples up to $1,000.

According to the 2008 Social Security Trustees Report, the estimated surplus under "high cost," or bad economic conditions, is as follows:

Year Social Security Trust *Payroll Credit Costs,
Fund Projected Surplus Proposed Legislation
(Billions) (Billions)
2009 $54 $24
2010 $57 $80.8
2011 $43 $37
2012 $26
2013 $5

* Source: Joint Committee on Taxation


"A sufficiently funded Social Security Trust Fund is critical in ensuring that seniors don't have to endure benefits cuts," said Daniel O'Connell, chairman of The Senior Citizens League. "Although we recognize the economy is in bad shape, we don't think putting the Trust Fund into the red is a responsible response."

The Senior Citizens League is advocating for any decrease in payroll taxes to be taken from the general treasury, not the Social Security Trust Fund.

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