5th News Special Report: Social Insecurity

it is special for you they don't want to have too many senior citizens are elderly people so what do you have to look forward to only your Social Security the system is in deep financial trouble it debates if people have to work for a living today I'll feel it by the time they're 62 the majority of them are burned out and they need retirement myself I don't think it'll make too much difference with the younger ones that are working now trying to build up something very very tournament let's do good you think you'll be able to retire on Social Security not the way it's going these days ever since President Reagan presented his plan for rescuing the troubled Social Security system a month ago people have been talking the 23 million Americans now living in retirement say their benefits are being eaten up by inflation and they can't afford any cuts workers contemplating retirement are asking whether they can afford it young workers are asking if Social Security will be there when they retire the administration says drastic action is needed now but members of Congress are rebelling against parts of the president's plan the whole issue of Social Security is turning into one of social insecurity good evening I'm Rick Roberts very few issues touch all of us like Social Security most agree that the system is in trouble part of the problem lies with the Social Security program itself it's undergone some dramatic changes since its inception 46 years ago President Franklin Roosevelt signed the Social Security Act into law back in 1935 it was intended to provide supplementary retirement income for a limited number of Americans over age 65 it was financed with a 1% payroll tax over the years the program grew to include an ever-increasing number of workers and as participation grew so did the benefits today Social Security funds disability benefits soul age medical care and a variety of other benefits the money received by individual beneficiaries has also increased steadily in 1972 Congress tied benefits to inflation every time the cost of living went up so did Social Security payments and to pay for the increased benefits we have had to pay higher Social Security taxes today we pay six point six five percent of the first twenty nine thousand seven hundred dollars in income to Social Security half of us now pay more in Social Security taxes than income tax Social Security taxes are scheduled for another increase in 1984 but that still isn't enough to adequately fund Social Security this year the system will pay out more than 160 billion dollars in benefits Health and Human Services Secretary Richard Schweiker says that rate of expenditure will mean trouble soon and if nothing is done the system will go broke as early as the fall of 1982 on May 12th President Reagan presented his blueprint for saving the Social Security system the president wants to reduce benefits for people who retire before the age of 65 according to the latest estimate six out of ten workers do just that but the idea to reduce benefits has already been shot down once by the Senate Reagan wants to lower initial benefits for new retirees at any age he wants a lower ceiling on the maximum family benefits for future retirees tighter eligibility rules for future recipients of disability payments and an end to some ex federal workers getting both Social Security benefits and Pensions from the government civil service system on the other side of the coin the president wants retirees over 65 to be able to earn as much as they want without losing benefits the administration also wanted to delay a cost of living increase for Social Security recipients scheduled for next month that met with immediate uproar and was promptly dropped reaction to the Reagan plan was immediate Marcia kkt talked to some retired Iowans on may 12th the day that plan was unveiled 43 thousand Polk County residents of which 11,000 live in Des Moines can count their blessings that President Reagan's proposals won't affect them very much those who plan to file for Social Security in the next few years may have to take another look at their plans the administration idea to save money by discouraging early retirement will affect them in the past sixty-six percent of the county's Social Security recipients asked for their benefits when they were between the ages of 62 and 65 I am of the opinion that a lot of people are continuing to work for a variety of reasons perhaps some continuing work actually because they need to work some continue to work simply because they want to work some Social Security recipients disagree with Reagan's proposals to pace if people have to work for a living today I feel it by the time they're 62 the majority of them are burned out and they need retirement to myself I don't think it'll make too much difference with the younger ones that are working now trying to build up something very very apparent let's do good the rapunzel's are controversial and expected to spend some time in Congress with photographer Tom Sherrod I'm Marcia cake 85 TV News Des Moines social security officers have received a lot of phone calls people wondering if their benefits are in jeopardy joining us now is Becky Stallman a field representative with a Social Security office in Ames Becky what types of phone calls have you been getting and what are people asking about all of this confusion well initially we received a lot of calls and a lot of people came into the office to ask when the changes would be in effect and who it would affect and what would that mean for their Social Security and whether or not they would receive money that has dropped off somewhat since the initial news came out but people are quite concerned about whether or not they're going to receive as much as they have got from Social Security fact of the matter is you don't know what changes are going to be do you and you won't until Congress takes some action no this has caused a lot of confusion people seem to feel that these changes are going to certainly go into effect and that it's already then passed it is a proposal at this point it is being considered by both the House and the Senate committees but that's all it is right now is a proposal and the final form in which it is passed if all of it is passed will be in question until Congress gets through with their work on the bill so we should make that clear right now nothing is changed nothing has changed as of today much of the legislation as it is proposed would not go into effect until 1982 under the proposal do many Iowans retire early this is one of the big things to come up early is the president's plan to cut the Social Security payments for people who retire at age 62 other many Iowans involved in these well I believe there are quite a few nationally the average of people who retire early before age 65 runs I think about 60% and I think the same figure would be true for central Iowa that there are quite a few people who choose to retire before they reach the age of 65 what's the present system now for people who retire before 65 what type of benefits do they get why are they or how much are they cut if you retire at age 62 your benefit check is 20% less than if you wait until you are 65 that is prorated on a month-by-month basis so that it would be 20% at 62 and a little more for each month that you wait until you are closer to your 65th birthday under President Reagan's proposal this figure would be 55% of what you would get at 65 if you take it at 62 so the percentage would be reduced quite a bit instead of 20% less it would be 45% less and that's quite a cut and if you retire early and you get 80 percent of your benefits now that you get the 80 percent that is a permanent reduction yes each check that you get from thereon will be that 20% less it will not change at age 65 on the other side of it the president says well let's have retirees work longer if they want and there are some proposals from some congressmen to up the retirement age to 60 to 68 do many Iowans work after the age of 65 yes there are some that who do on there some who depend on that income just to live on they can't really afford to quit there are others who really enjoy what they're doing and don't necessarily have any intention of retiring it's kind of hard to say for what reasons they do but there are quite a number who continue to work right now there are many who limit their income so they can keep their full Social Security check all the way through the year how much can you earn after 65 without losing any benefits this year if you are 65 or older you can earn up to $5,500 and still receive all of your Social Security checks if you earn over that amount for every $2 you earn above that figure one dollar has to be withheld from your Social Security check what other benefits are there to Social Security it's a big program spends a lot of money what can people get from Social Security well most people think of social security in terms of retirement and whether or not they're going to live to 62 or 65 and see any benefit from that there are certain benefits to be had though from a person who is currently working there's a disability insurance coverage and survivor insurance coverage if a worker becomes disabled or dies there are benefits payable to certain categories of survivors and to dependents on the record and this really provides a very good insurance program for people who qualify under those circumstances nobody wants to collect under those types of circumstances but if you do find yourself in that situation the money certainly is very much of a necessity for these people Social Security now also funds Medicaid is that Medicare Medicare Medicaid Medicare is a program administered by the Social Security Administration and it is funded by the Social Security taxes that are paid a small portion of it also comes from people who pay monthly premiums who have medical coverage under Medicare now there are some confusion in this whole issue of Social Security there are four trust funds isn't that right yeah that we get that we pay the money out of work for the benefits and one of the trust funds is the big one that's in trouble which one is that okay the retirement and survivors trust fund is the one that they are talking about will see a deficit by mid 1982 right now there is a balance in the trust fund at the current rate benefits are being paid however it would see a deficit of approximately two billion dollars by fall of 1982 the other three trust funds the disability trust fund and the two Medicare trust funds the hospital and medical insurance ones are running long they have a surplus in the Treasury and there's enough money there to cover that there is a proposal right now to allow Congress to borrow among the trust fund so that the short term deficit in the retirement one would be offset by the extra money in the other three I was probably going to be a little while before Congress finally does something about Social Security but aren't there of two things that they're going to act on probably fairly quickly at least in committee there are some proposals that have already been endorsed by both the House and Senate committees and they are scheduled to be reported out for debate in the full House and Senate this month those include eliminating the minimum right now there is a guaranteed minimum retirement benefit at 65 of 122 dollars under the proposal you would get the actual benefit is figured by the formula if the farming only pays you $40 a month that's what you would get rather than the guaranteed 122 there is also proposal to eliminate benefits to students between the ages of 18 and 22 to phase that out over a four-year program and there's also proposal to eliminate the lump sum death payment accept to surviving widows and two surviving children the proposal to eliminate payment to college students so that have a very big impact in central Iowa yes I believe a word from what we can determine there approximately 1,200 students at Iowa State who receive Social Security benefits so right there would be a sizable number of people who would be affected and who would have their social security checks phased out over a four-year period and eventually dropped all together what's the average Social Security recipient get is there such a number as an average payment well it depends on what category of payments you are talking about I believe the latest figures for say a retired person who is collecting benefits is around three hundred eighty-five dollars for that retired person beyond that it depends on what category you're talking about and how many dependents are receiving on that person's record what should a person do if there's a 6061 thinking of retiring early or 64 and thinking of retiring at 65 what do you have to do to prepare for it as far as getting their benefits well many people come in and check at the local Social Security office to see how the law may apply in their own particular situation depending on the type of work you do and when you're retiring there are a number of answers that we can give to questions you may have you can check and see how much your benefit might be at that particular point and we usually talk to you about what sort of documents we need for you to establish your claim such as a birth certificate and your most recent w-2 forms or tax returns when is it most advisable for them to come is there a certain period can it come three four years in advance or should they wait we usually would like to give a better idea of what your would be if you're around age 60 or 61 prior to that time it's a little more difficult to give you a very accurate figure simply because now retirement benefits are tied to indexing or what the dollar is worth at the time that you become 62 and since that is such a variable thing right now it becomes awfully difficult to give you a figure that could be close to what you may expect to receive when you do retire all right Becky Stallman field representative with the aim social security office thank you for spending some time with us and we're going to continue our look into the problems facing the Social Security system in just a moment Congress is now looking for ways to keep the Social Security system solvent a few days ago budget director David Stockman and Health and Human Services Secretary Shriker defended the administration proposals Joe Templeton has the reports some 300 people many of the members of organizations concerned with the elderly attended a House hearing to express their opposition to President Reagan's proposed plan to cut back on early retirement benefits and reform the Social Security system budget director David Stockman told the panel that critics of the administration's package don't understand the magnitude of the crisis facing Social Security unless both the House and the Senate passed a bill in this Congress which can be signed by the president in the next 15 5 most devastating bankruptcy in history will occur on or about November 3rd 1982 because at that point even under optimistic economic assumptions the plug will be pulled on the great check-writing machine in Baltimore thereby precipitously severing the financial lifeline to 32 million retired Americans and their dependents and survivors earlier Democrat Jake pickle the subcommittee chairman Camilla collector Secretary of Health and Human Services Hank XY if his pen will not approve any white house plan that would cut back on early retirement benefits unless it contains what he called a reasonable phase-in period ykers that the administration is open to compromise Jo Templeton ABC News Washington in an effort to find out how Iowa's congressional delegation feels about the social security problem we recently conducted separate interviews with senator Roger Jefferson and Congressman Neil Smith here's some of what they had to say the system is in deep financial trouble now that's something that everyone that knows anything about Social Security at all levels in and out of government has acknowledged for years but it has been so politicized over the years by all administration's and many people in Congress it's been used as a sort of a political Santa Claus Christmas tree over election year to add the new gift on it that it it has not really been discussed in the light of serious financial actuarial soundness we have run into a period here where the outflow is greater than the inflow it's nothing that can't be cured but it does require doing something about it I mean it's the actuarial valuation that was made a few years ago has proved to not be correct not that the people the time made a mistake but the fact is that people are living longer in the work to time our unemployment rate is higher than it was at the time therefore the not as many people are contributing to the plan I've heard many band-aid solutions that collectively some of where some of which collectively may be used in the final overall solution we have in fact payments being made denial for full college payments to people who are millionaires they happen to have the the right combination of being retired under Social Security and yet to have youngsters who are going to school yet and so their youngsters get full benefits paid Social Security for going to college and they're millionaires now that isn't what Social Security was set up for we have a disability provision in there that says that if someone who hasn't worked for five years not nothing not just under gainful employment hasn't worked at all can suddenly come in and say oh and disability benefits and receive them now that's not what Social Security set up for one thing is that I don't think that we ought to look at the Social Security system in isolation - all the rest of the government we have high employment and we have always encouraged people to voluntarily retire early that helps with the unemployment column we don't force them to but seventy percent have been retiring early and I don't think that's an unhealthy thing if we don't do that if we turn clear around and encourage people to work three or four five years longer there will be less jobs available for those that don't have a job we we will have more expenditures and some other areas of the government than we have now and it will be somewhat counterproductive I think we can come up with better plans to solve this situation and be we must do so and at age 62 the reason that the benefit is less than sage 65 has been available for years is 80% of what 65 now that has some action where you're planning to it but now to come out and say that we should reduce the 80% at 62 to 55 percent is not fair it's not right it won't be done I assure you that and in addition to that it's a wrong signal that's sent to the people who are in Social Security because other people who are out here say at age 70 or 75 or at any age look at this and they say well now if they can do this and they can take away then they can take away from the benefit that I may have anywhere anytime along the line and many people aren't Social Security in this country and even though it wasn't meant to be this way it's the only income they have how soon do you think Congress might act I think we're going to act this year one last question are Republicans and Democrats likely to agree on solution I think they are in this case I can't predict it when we're going to see it by it's taken us a half a century or so to get into this mess I would suggest that give us a 90 or 120 day leeway of when we might just start to take some steps to get out of it we'll be will have to do something yet this year Social Security wasn't intended to be the sole source of income for retirees but merely a supplement but there have been a lot of changes since the Social Security Act was signed in 1935 and today Social Security is all that many Retired Persons have Beatriz Washington is a volunteer worker at Edmonds Elementary School in Des Moines she's known to her students as grandma Washington at 72 her only source of income is who 270 $1 a month Social Security check she told reporter Kevin nice Wagner what it's like to live on that amount the thing going higher giving higher all time and you have to budget and there's your insurance both insurances and then there's add other expenses for your homes and all and food which is really out of reason and you have to you have to learn to get along and I've ever learned how to get along and if they cut the Social Security like they're trying to I don't know what would happen there you have to try to get along with the without the necessary things what would have to go first if they cut Social Security well you'd have to cut back on food you'd have to cut back on try to cut back on medicine and not see your doctor so often that was your class I got a man are you doing good help you join your lunch yes I am just good and selling me hey I have been paying into Social Security for years and I feel that I have not had very high Social Security Beatrice's optimistic President Reagan and Congress will find a way out of the Social Security mess and she hopes the system can be stabilized without having to reduce benefits the interest says the president's proposal to let Social Security recipients earn more money without jeopardizing their benefits sounds good but there aren't many jobs for senior citizens they don't hire a senior citizen and so then you have to depend on your Social Security other time it's your age you know after you're over the hill when you're 55 and then when going downhill rather and you you know over 55 over 55 and so they don't want to hire a too many senior citizens or elderly people so what do you have to look forward to only your Social Security in addition to the short term problems of the Social Security program there is a long term problem after the turn of the century baby boom children will be retiring in droves but there will be fewer workers to support the system an Associated Press poll showed that 74% of those surveyed expressed little or no confidence that the Social Security system will pay off in their retirement so we wondered what you thought we recently asked some of you to speak out on the issue I don't know the don't know how to still have be enough money left I think it would be bankrupt to get to a few people paying into it and too many people collect and it didn't pay very long my job very seriously I'd only be enough money for us no I don't think it would be adequate or a viable system at that time why not the economics of it doesn't work out with more people retiring there are not people paying in to keep it going you think you'll be able to retire on Social Security not the way it's going these days there probably won't be any one girl for old I guess a little I know about economics it just seems like something very drastic and very unpopular would have to be done in order to make it available for me it's becoming clear to most people the Social Security alone won't be enough when it comes time to retire there are many things we can do now to provide for a better retirement to begin with there are pension programs 155,000 state city county and school district employees in iowa are enrolled in the Iowa Public Employees Retirement System thirty-three thousand retired workers are currently collecting benefits from the pension many companies also have retirement programs for their employees but pension plans are not indexed for inflation or most of them are and what looks good now might not when it's time to retire and estimates say 30 to 50 percent of all workers in the private sector are not covered by a pension plan a presidential Commission has suggested a universal pension program for all of us but there are a lot of bugs to be worked out and it faces an uncertain future workers not covered by a pension have several alternatives money experts say we have to make every penny work for us if you can afford them there are several investment opportunities ranging from stocks to Treasury bills but they often don't provide the investor with a tax shelter and only one person is paying into the investment with a pension program both the employee and the employer contribute most banks and savings and loans can make it possible for the small investor to create his own pension plan it's called an individual retirement account or IRA workers not covered by the pension plan can put up to fifteen hundred dollars a year into the accounts basically you pay the trustee of the bank whoever would be the $1,500 they will and invest that for you in your own individual IRA account eventually when you elect a distribution of that accounts you will then pay income tax on both the $1,500 and on the interest it's earned during that period of time if there are any deficiencies in this period of inflation is that the $10,000 ceiling is probably too much in that they can only contribute $1,500 now in this time of high inflation that may be all are able to to to and the other thing of course is there's no employer making a matching contribution to the fund so it grows only as fast as you can help it out there's also something known as a Keo account for its self-employed persons that's our report for tonight Congress will be examining the social security issue in the weeks and months ahead we'll keep you informed on the latest developments each night on five TV news I'm Rick Roberts good night