Social Security is 75 Years Old
August 22, 2012 § Leave a comment
This month Social Security celebrates it 75th birthday. Most of us are too young to have personally witnessed the profound change the program has made in the lives of senior citizens and disabled persons. In 1935, when President Franklin D. Roosevelt signed the Social Security Act into law, it was common for the elderly and the disabled to be poverty stricken because they had no means of supporting themselves. They were often forced to live in facility settings or with family or other care providers who were burdened with the responsibility of caring for the disabled person, whether they were qualified to do so or not.
75 years later, Social Security makes up the majority of income for two-thirds of Americans over the age of 65, and the percentage increases as these folks age and are unable to supplement Social Security with work. The financial importance of Social Security will only rise for citizens as defined benefit pensions continue to disappear and 401Ks and personal savings accounts dwindle due to the vicissitudes of the financial markets.
The National Senior Citizens Law Center (NSCLC) released a statement last week asking for the public to see the anniversary as “an opportunity to continue a historical pattern of improving and updating the program, not threatening to scale it back.”
The NSCLC listed several improvements that they feel are necessary to update the Social Security Program:
- Equal benefits for those in a same sex committed relationship. Currently, those in a same sex relationship are denied benefits that are routinely available to those in an opposite sex marriage, such as the widow or widower benefit and the spousal benefit.
- Caregiver credit. Currently, when one spends time out of the labor force for the purpose of child care or to care for an aging parent, this time is not recognized in the calculation of the Social Security benefit. Upon retirement, this most often results in lower benefits for caregivers, who are generally women. Additionally, women generally already have lower benefits due to the fact that they earned lower wages over their lifetime. This results in a double-whammy for women, who additionally, live longer than males. Various proposals have been made for correcting this gap.
- Use CPI-E for calculating the annual Social Security COLA. Currently the annual Social Security cost of living adjustment is calculated by use of the CPI-W, which is based on a survey of the living expenses of a working population and excludes from the survey anyone over age 62. The CPI-E, or Consumer Price Index for the Elderly, is a more appropriate measure of the cost of living of Social Security beneficiaries, who because of age and/or disability spend a much higher portion of their income on health care. The CPI-E needs to be made more robust and should be used to calculate the Social Security COLA.
- Eliminate or raise the FICA cap. Currently only the first $110,100 of annual wages is subject to FICA. Because of rising income inequality, this captures a smaller percentage of total wages than it did 30 years ago. Raising the FICA cap and/or gradually increasing the percentage by a modest amount from the current 6.2% of wages would eliminate the current projected long-term shortfall in the Social Security Trust Fund and would pay for the suggested benefit improvements.
We hope you can take a moment to reflect on the difference Social Security has made for this nation. Overall, this is a government program that works, and works well. Our clients sit before us every day, receiving Social Security Retirement Income every month. It is a program that has made a difference in the lives of the elderly and without it, these seniors would have no income to support themselves. That, in itself, would lead to any senior unable to work being housed in a nursing home, whether they truly needed care or not. And without income, Medicaid would pay for that bill. In the long run, Social Security is so much more cost effective than the alternative.
The Law Office of Dawn M. Weekly, PC is located in Sandwich, Illinois and focuses on elder law and Life Care Planning for clients. The office may be reached by calling 815-570-2334.
Every day of every week, Weekly Law is there for you.