Retirees fear shrinking Social Security checks

The news that Social Security benefits will likely be frozen next year dismayed many older Americans, who said they feared that rising expenses for medication and other necessities would drive them into retirement poverty.

“A lot of them aren’t going to be able to survive,” Anne Gondek, a retiree in Chicopee, Mass., said Monday, after the federal program for the elderly and disabled projected that for the first time in 34 years, there would be no cost of living adjustment (COLA) in payments for the next two years.

The average monthly Social Security benefit for retirees is $1,153 this year; usually, it goes up in step with the rate of inflation. Increases have ranged this decade from 1.4 percent to a high this year of 5.8 percent.

But with the economy in a deep recession, there’s officially no inflation for the program to keep up with, said Dane Partridge, a management professor at the University of Southern Indiana in Evansville.

The problem is that senior citizens, who make up most of America’s 50 million Social Security recipients, pay a disproportionate amount of their income on health care — which isn’t reflected in the Consumer Price Index, the main measure of inflation that’s used to calculate the annual Social Security increase, Partridge said.

That means a freeze in Social Security payments will translate into a drop in real purchasing power for many seniors, said Jo Wiejahn, a senior citizen in South Bend, Ind.

“Any time the ... income stays the same but everything goes up from the groceries, car maintenance — everything — you are actually going backward,” Wiejahn said. “Even though I work, the fact that my Social Security is going to stay the same is tough, because that’s basically the money I depend on.”

Besides Medicare, “everything goes up” for older consumers, said Velma Edmonds, a retiree in Paducah, Ky. “Your insurance goes up, and of course you know how utility bills will probably be jumping and everything. ...

“I don’t know what we’ll do,” Edmonds said.

For some, monthly checks will shrink
The situation is worst for about 6 million retirees, whose Social Security checks will actually shrink, even though, officially speaking, benefits can’t legally be reduced.

Social Security COLAs Annual percentage increase in Social Security payments derived from the cost-of-living index 1975 8.0 1976 6.4 1977 5.9 1978 6.5 1979 9.9 1980 14.3 1981 11.2 1982 7.4 1983 (Before 1983, increases were awarded in July. Starting in 1984, they have been awarded in January. The change moved 1983’s adjustment to January 1984.) 1984 3.5 1985 3.5 1986 3.1 1987 1.3 1988 4.2 1989 4.0 1990 4.7 1991 5.4 1992 3.7 1993 3.0 1994 2.6 1995 2.8 1996 2.6 1997 2.9 1998 2.1 1999 1.3 2000 2.5 2001 3.5 2002 2.6 2003 1.4 2004 2.1 2005 2.7 2006 4.1 2007 3.3 2008 2.3 2009 5.8 2010 0.0 (projected) 2011 0.0 (projected) Sources: Social Security Administration; Associated Press

Because premiums for the Medicare prescription drug program are expected to increase, checks for Americans who have their premiums deducted directly from their Social Security payments will actually be a little smaller.

For Americans on fixed incomes, which includes many retirees, that will be particularly tough, said Tricia Gorden, director of community resources at REAL Services, a nonprofit service agency for the elderly in South Bend.

“Those costs are all rising,” Gorden said. “Prescription costs are all rising, [along with the] cost of home health aides, and therefore their current fixed income isn’t meeting those needs.”

The historical average COLA bump, about 4.4 percent, may not sound like much, but “it helps, every year, to get that little increase,” Dewayne Franklin, a retiree who lives on a fixed income, said over lunch with his wife at the McCracken County Senior Citizens Center in Paducah.

“That goes a long ways,” Franklin said. “That’s another week’s groceries.”

Palmer Hanebutt, a retiree in Evansville, said the math was simple for retirees like him, who live off Social Security.

“If Social Security comes down or goes at the same rate, we have to find the money some other way, and at my age, I can’t work,” Hanebutt said.

“I’m on six different medications, and medications haven’t been coming down any, so I can’t cut back any there.”

‘They can’t provide for themselves’
At the Aging and Disability Resource Center in Eau Claire, Wis., case managers said they would feel the strain, too, as more seniors need help.

“It just decreases their income where they can’t provide for themselves,” said Mary Mero, who works part time at the center.

Robert Hanson, a retiree who often drops by the L.E. Phillips Senior Center in Eau Claire, said he was in pretty good shape and lived frugally enough that he could still get by.

But he said he worried about frailer retirees, whose medical expenses meant they were already “at the bare minimum.”

If the Social Security freeze happens, Hanson said, “there’s no way they [will] get enough to survive on.”

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