By Brian Goslow
Marjorie Pratt, 80 knows the benefits of Social Security. But so does Mark Walker, 57, who depends on the program’s disability benefits, or Susan Rummel, 63, who has resorted to early benefits to keep her financially afloat.
This month, Social Security turns 75; President Franklin D. Roosevelt signed the Social Security Act into law Aug. 14, 1935. While most think of it as the reward waiting for those reaching retirement age, many other segments of the population actually depend on it for economic stability.
“There’s an array of people receiving Social Security protection,” said AARP Senior Vice President Lisa Davis. “It’s not just about retiring. I can’t think of a larger multi-generational policy.”
Two years ago, newspapers and media broadcasts were filled with talk of Social Security going to a more privatized system. “Many of the proponents tried to promote generational conflict,” Davis said. Part of the privatization campaign promoted the idea that the baby boomer generation would devastate government coffers to the point there would be nothing left for other government programs.
“The deviation in the market certainly changed that discussion,” Davis said. “With the financial crisis, people have pulled together. All generations have faced tough financial pressures.”
To bring focus to the issue of strengthening the current Social Security system, AARP has been calling attention to the overall benefit program. “Social Security income is a financial lifeline for many families in retirement or with a member with horrible disabilities or the loss of a wage earner,” Davis said.
Davis is emphatic that critics who say that Social Security isn’t going to be there for today’s young people are wrong. “I respond, ‘It’s there for them today; it’s going to absolutely be there for them when they retire,’ ” she said. “Social Security is not going bankrupt; it’s adequately funded for another 27 years. With no changes to the current setup at all, it’ll get to 2037. After that, even 76 percent of the benefits will be paid.”
Everyone recognizes major adjustments have to be made to the current program; Americans also have to recognize they need to pay attention to planning their own retirement years.
“The quicker changes are made, the broader the timeline for people to change and adjust their retirement plans,” said Davis. She said it’s important Americans not look at the Social Security program in a vacuum, but as part of the bigger picture of considering how to fund their retirement years.
“A lot of folks talk about seniors driving their Lexuses through gated communities; that’s not reality,” said Davis “Not when $1,168 is the average monthly retirement benefit.”
Walker of North Andover, was born with Spina Bifida (also known as myelomeningocele), a developmental birth defect in which the spinal cord and backbone do not close. Despite the challenges of the condition, Walker spent 14 years working at a local hospital, followed by four years at IBM. He credits his parents with not allowing him to use his disability as a crutch and lived as normal a life as possible.
Then, in 1990, a failed kidney put him temporarily out of work. Because he had been earning a decent pay, he didn’t qualify for the assistance programs he approached with the help of “a lot of legwork” by his parents.
He was turned down for food stamps and had made too much for welfare benefits. Then Walker found out he was eligible for Social Security Disability assistance. The payments allowed him the piece of mind to turn his attention to improving his health. Three years later, he returned to work at a Lawrence independent living center.
His other kidney began to worsen in 2006 and he was no longer able to work. Through his position at the living center, he had learned a lot about Social Security and Social Security Disability Insurance. Having helped others go through the application process, it was his turn to benefit from the program.
Social Security has been Walker’s only source of income since that time. “It’s all I’ve got; it allows me to function,” he said. “I couldn’t pay my bills if I didn’t have it. I’d be basically destitute.”
Rummel of Danvers has run a custom drapery business out of her home since 1989. She hadn’t planned on dipping into her Social Security benefits before she became eligible for full payments. Two things changed her mind — a gradual decline in business since 9/11 and when Massachusetts mandated health insurance.
“I had gone a long period without insurance,” Rummel said. “My family got on me to get a real job and get health insurance.” So she updated her resume and got a job at Abbott Laboratories with great health coverage. A year and a half later, her department was moved out of state.
“I was back in the same place and closer to retirement with no health insurance until I’m eligible for Medicare,” Rummel said. Now getting her insurance through the state, she’s currently paying a lower monthly premium, approximately $400 per month, but is responsible for co-pays.
She has painfully experienced the challenges of covering co-pay costs: $2,400 for knee surgery for a torn meniscus and arthritis in her knee and $1,000 for a colonoscopy. “Even paying $150-$200 a month, you’re still looking at four or five months of payments.” She estimated 15 percent of her annual income goes towards health-related expenses. “I’m afraid to go to the doctor because of the co-pay,” she said.
While Rummel is still running her drapery business, like everyone else, she’s taken a financial hit. To pay back bills and taxes, she liquidated a small IRA worth nearly $14,000. Still needing more income to make ends meet, she scheduled an appointment with her financial advisor, who suggested she take early Social Security.
“He looked at my finances and said, ‘You’re reaching that area where if you take the money now, it’ll take the curse off,’ ” Rummel said. It would take her until she was 83 to recoup the amount of money she had lost between ages 62 and 66 by taking Social Security benefits before reaching full retirement age. “So it was a no-brainer,” she said. “If I hadn’t taken it, I don’t know where I’d be.”
Rummel, who has a second IRA she hopes to leave untouched until she retires, keeps a close watch on her income and expenses. If her drapery business income exceeds a specified amount in any given month, she needs to notify Social Security, which adjusts her payment accordingly.
“I sit at my computer and enter my money as it comes in so I know where I’m at financially,” Rummel said. While she has to adjust her lifestyle — “I have a whole different method to follow; the mental part is hard,” she said — she’s comfortable. She is a lot happier thanks to the Social Security payments. “I love what I do and I know when I can take a day off and go out to eat. At this stage of my life, I just feel I deserve it. It’s my money I paid into (the system). I’ve earned it.”
AARP Massachusetts President Linda Fitzgerald learned how Social Security can help Americans early in life as well as in retirement when her son-in-law died suddenly two years ago, leaving her daughter to raise their 11 year-old-son alone.
“My daughter was able to receive Social Security Survivor Benefits,” Fitzgerald said. “It’s been able to support her and my grandson. She works full-time but it takes two incomes to support a family these days.” The benefit has allowed them to continue living in their house.
Then there are the more traditional beneficiaries of Social Security. Pratt of Worcester learned the benefits of the program through her mother, who lived to 103. “For a long period of time, it was her sole source of income,” said Pratt, the president of the Worcester chapter of AARP.
Her mom taught her to be cautious and pay attention to things that go on with banks, especially those holding your money. “Having been well into her adult years during the Depression, did it ever apply to her,” Pratt said. “She taught me that everyone has to be really careful about their day-to-day expenses.”
Pratt was a young child in those “depressing” times. “They were tough years for our parents to raise us and maintain their own health. You don’t ever shake free of that memory,” she said. “That’s the reason they call us the Greatest Generation. We’re sensible people. We hope the next generation has the same benefits and security of a Social Security check (that came out of that period).”
Pratt, who spent most of her adult life raising her seven children before resuming her career as an office employee, retired and began collecting her Social Security retirement benefits at 72. After spending his entire working career as a buyer for an electrical supply wholesale firm, her husband, Robert, now 83, joined her retirement shortly afterwards.
Their Social Security checks allow them to live comfortably with a good state of mind. “A big part of it, to employ a single word, is ‘security,’ ” Marjorie Pratt said. “I know exactly what the amount of the check is and the date it’ll be put in my bank account for the purpose of covering our expenses. We know we can take care of our day-to-day expenses and we’re in our home (without worry). So with anything else that comes in, from smaller things, like our CDs that don’t bring in any interest anymore, we can go on vacations and family events.”
For more information, call your local Social Security office or go online at ssa.gov. Information can also be found on AARP’s website, aarp.org/work/social-security.
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