FEBRUARY 20, 1995 VOLUME 2, NUMBER 33
As mentioned in previous Elder Law Issues, the Arizona White House Conference on Aging held in Phoenix last month dealt with issues facing the full White House Conference on Aging when it meets in May. Arizona’s delegation dealt with several issues expected to dominate the national aging agenda.
A person nearing age 65 in this last decade of the twentieth century has a life expectancy of 85. The life expectancy for the average adult at the end of the nineteenth century was 47. Improvements in health, disease control and lifestyles have made it possible for today’s elderly to expect much longer and more productive lives.
In 1950, the average Social Security benefit was $43.86. By the 1993, the average monthly benefit for workers was $656. For widows and widowers, the average benefit was $624 in 1993.
Although Social Security was originally intended as a supplement to private retirement sources rather than as the principal source of retirement income, the result has been the opposite. Half of today’s retirees receive no pension benefits other than Social Security, and of those with second pensions nearly 60% get less than $100 per month from those sources.
Nationally, Social Security benefits provide about 40% of retiree income. Accumulated assets provide 25%, earnings 18%, and private pensions just 14%. Americans have never been good savers, and sixty years of Social Security seem to have discouraged our already low rates of saving.
As annual federal spending nears $1.5 trillion in 1995, concern mounts about the rising share of the national budget dedicated to Social Security and other “entitlements.” Unless changes are made in the way we fund Social Security, the entire budget will be required just to make the payments on Social Security and the national debt by 2011.
Some changes have already begun. The usual retirement age will raise from 65 to 67 in three decades. Some taxes are now collected on Social Security benefits for the wealthiest recipients, with the proceeds going into the Social Security system. But further changes will be required to prevent bankruptcy of the fund by the year 2029.
Meanwhile, the poorest recipients of federal largesse remain at levels inadequate to provide even basic needs. Over 1.5 million persons age 65 and above qualify for Supplemental Security Income because they receive total income (from all sources) of $458 or less.
In an era of budget constraints and shortages, the need to redesign Social Security benefits and taxes seems inevitable. The obvious challenge will be to do so in a fashion that preserves the value of the program.
[Next issue: Long Term Care]