Taking Social Security's temperature
Is the program going to survive?
October 1, 2017
For now, Social Security is in the black. In 2016 the Social Security Administration (SSA) took in income of $957 billion, which includes interest income. During the same year, it had total expenditures of $922 billion, adding $35 billion to its asset reserves.
The reserves together with new income that is projected, should be enough to cover SSAâ€™s costs for another 10 years. But unless something changes, by 2022 the expenditures will start to outpace the income, gradually gobbling up the reserves.
Whoâ€™s collecting Social Security benefits now?
About 61 million beneficiaries were collecting Social Security at the end of 2016. That included:
* 44 million retired workers and dependents of retired workers.
* 6 million survivors of deceased workers.
* 11 million disabled workers and dependents of disabled workers.
You probably know that you can start collecting Social Security benefits as early as 62. But that will mean collecting a monthly check that is up to 30 percent lower than if you wait until your full retirement age. However, you will collect benefits for more years by starting early. If you wait until your full retirement age, benefits may increase by 32 percent, though youâ€™ll collect benefits for fewer years. After age 70, there is no further increase to be had by waiting.
What about the future of Social Security Disability?
Previously, the Social Security Disability Insurance Trust Fund (SSDI) was supposed to become insolvent by 2016. Now that can has been kicked down the road a bit, to 2023. That might seem like good news, but it happened because Congress gave a temporary patch to the fund, by taking some revenue out of the Social Security Old-Age and Survivors Insurance Trust Fund. Keep an eye on Congress to see what happens next.
Social Security and inflation, a shocking loss of buying power
According to one source, the Senior Citizens League, current mild inflation (about 2.1 percent) may mean a bigger increase than usual in your Social Security check for 2018. You may know that Social Security benefits rise with inflation, which is why in some years, there is no increase at all. Unfortunately, items purchased by seniors are rising faster in price than the overall inflation rate. For reasons most of us donâ€™t understand, a different inflation rate is used to determined your Social Security raise, and it excludes many of the areas of expense that you are most likely to consume.
One study showed a loss of 7 percent buying power in a recent 12-month period, while for 2017, Social Security recipients got a raise of .3 percent.
â€śWhen costs climb more rapidly than benefits, retirees must spend down retirement savings more quickly than expected, and those without savings or other retirement income are either going into debt or going without,â€ť said Mary Johnson, the author of the study.
Among the costs in the study were:
â€˘ Medicare Part B premiums. In 2000 those premiums were $45.50. This year, they are $134, an increase of 195 percent.
â€˘ Medigap supplements, average of premiums for all plans. In 2000, $119. In 2017, $264.45, an increase of 122 percent.
â€˘ Homeowner insurance, national average premium. In 2000, $508. In 2017, $1,292, up 154 percent.
To read more results of the study, log onto http://seniorsleague.org/loss-of-buying-power-press-release/
Need someone to help manage Social Security benefits?
If youâ€™re concerned that someone you know has become incapable of managing or directing the management of his or her benefits, there may be help available. The help is in the form of Social Securityâ€™s Representative Payee program, which provides financial management to beneficiaries of Social Security (SS) or Supplemental Security Income (SSI) and providing guidance and oversight to rep payees.
The Social Security Administration (SSA) generally looks for family or friends to serve as representative payees. But when these are not available, they look for qualified organizations to serve in that capacity. You can call on behalf of a person needing help, at 1-800-772-1213 (or TTY 1-800-325-0778) to make an appointment and talk it over.
If you would like to become a rep payee, the SSA provides guidance and oversight in the form of booklets and also online webinars. Currently, they say more than eight million people need help with money management. Be aware, if you apply to serve as a rep payee, the SSA will thoroughly investigate you in order to protect the interests of benefit recipients. Youâ€™ll also need to fill out a form each year detailing how you used the recipientâ€™s benefits (other funds the recipient may get are not under the control of the rep payee).
With limited exceptions, you cannot receive a fee from the beneficiary for acting as a rep payee, unless Social Security allows it or unless you are the legal guardian authorized by a court to charge a fee.
Another path for help
If the Social Security or SSI recipient also has other funds that need management, and you are a family member, you could also use a power of attorney to handle other finances. But for Social Security purposes, the SSA only recognizes a designated rep payee to handle those benefits. To learn more about becoming a rep payee, log onto: https://www.ssa.gov/payee/newpubs.htm