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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AARP Survey: Americans of All Ages Plan to Rely on Social Security

/PRNewswire/ -- With the 75th anniversary of Social Security approaching, AARP released a new survey report that shows that three in four (75%) adults age 18+ rely on or plan to rely on Social Security for their retirement income, including a large majority (62%) of younger adults age 18-29. The survey also showed a strong majority of those polled oppose reducing Social Security benefits for deficit reduction (85%), and support the infusion of additional revenues into the system to provide the same level of benefits in the future (57%).

Changes to Program Should Strengthen for Long Term, Not Reduce Deficit

The AARP survey found that regardless of age, 85% of adults oppose cutting Social Security to reduce the federal deficit, with more than seven out of ten (72%) strongly opposing it.

However, many support other changes to keep the program strong for future retirees. Over three-quarters (77%) of non-retired adults are worried that they may not have enough money to live on in retirement. To that end, 50% of non-retired adults are willing to pay more now in payroll taxes to ensure Social Security will be there for them when they retire, a finding that has remained consistent over time. Over half (57%) of adults under age 50 would prefer to pay more into Social Security so they can get the same level of benefits provided today as opposed to keeping payroll tax rates at current levels in exchange for lower benefits.

Eight in ten Americans 18+ (81%) believe the government made a commitment to Americans about Social Security being there for them when they retire, and that the government cannot break its promise. In addition, over eight in ten Americans (83%) agree that regardless of income, everyone who pays into Social Security should receive it, a finding that has not changed over time.

"The message from people of all ages to Washington is clear - don't erode the one bedrock of retirement security that unites all Americans," said AARP Executive Vice President Nancy LeaMond. "Americans see Social Security as a benefit they've earned over a lifetime of hard work, and they oppose it being used to reduce the deficit."

Lack of Confidence Does not Diminish Support, Including Among Younger Adults

Although confidence in the future of Social Security has consistently been low over the last 25 years, Americans of all ages strongly support the program. Consistent with previous surveys, a strong majority (63%) believe Social Security is one of the very most important programs in this country, with nine out of ten (90%) younger adults age 18-29 saying that Social Security is an important government program. Among non-retirees who are not confident about the future of Social Security, 84% agree with the statement that "Maybe I won't need Social Security when I retire, but I definitely want to know it's there just in case I do."

In addition, the public's lower level of confidence in the future of Social Security can be partially explained by the lack of awareness about solvency. Only one in five (21%) Americans knew that if the Social Security trust fund is exhausted in 2037, Social Security could still pay reduced benefits.

"Americans overwhelmingly understand that Social Security has literally been a lifeline to millions of friends, family members and neighbors for 75 years," added LeaMond. "More importantly, they want to make sure it will still be there for future generations. Younger Americans, although worried about whether Social Security will be there for them, value the program with unquestionable support, and want to know that they can rely on the benefits when they retire."

Social Security Provides Financial Security for Families

The AARP survey found widespread understanding and support for Social Security as an important resource for families and their loved ones.

Americans overwhelmingly support Social Security's protections for people who are disabled and for children and widowed spouses of deceased workers (91%). Almost two-thirds of Americans 18+ (65%) say that their family would be hard hit if Social Security were cut, including 72% of adults whose household annual income is less than $50,000. Eighty percent of Americans appreciate that Social Security alleviates the financial burden of taking care of parents and 88% of non-retired adults believe Social Security helps older Americans remain independent.

With increased attention on Social Security's future, the survey assessed Americans' attitudes toward key features of the program. Across all ages, nearly eight in ten (79%) Americans surveyed agree that Social Security should continue to provide guaranteed benefits while few (19%) think that it should be more like an investment account, subject to risk of possible losses. Half of Americans believe that Social Security payments for retirees are too low.

"We are celebrating Social Security's 75 years of success in reliably helping millions of people age with dignity, confidence and independence," said LeaMond. "We encourage leaders in Washington to reassure all Americans - in words and in actions - that Social Security will be strengthened, not treated as a piggy bank for deficit reduction, so that we can celebrate again 75 years from now."

During the August Congressional recess, AARP is engaging Americans of all ages in activities around the country to demonstrate to lawmakers the importance of Social Security. The organization is going to state fairs, holding community conversations, and collecting petitions that ask the President and Members of Congress on both sides of the aisle not to cut Social Security benefits for deficit reduction and to keep Social Security strong. AARP has already collected 1.5 million petitions over the past few months.

AARP commissioned GfK Roper, a national survey research firm, to conduct a national random digit dial (RDD) telephone survey of 1,200 adults aged 18 or older. A total of 781 respondents were not retired and 419 were retired. Interviews were conducted from July 15th to 27th, 2010. The results from the study were weighted by age, sex, race, region, and education. The margin of sampling error is approximately +/- 3%.

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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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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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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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