Social Security: 'An American Success Story'

MSNBC — Friday, August 13, 2010 / MSNBC

Levittown — For more than seven decades, the Social Security program has been helping millions of Americans, from adding to their retirement income to providing disability income.

The plan was a lifesaver to those struggling in poverty through the Great Depression, and continues to be for many retired citizens without pensions or savings. Despite initial fears of socialism, most would agree the small cushion Social Security provides makes a big difference in a lot of people's lives.

To this day, it's still one of the most important sources of income for older Americans.

But even as the administration celebrates Social Security's 75th anniversary Saturday, many people are wondering what the next 75 years will look like, especially because many retirement savings accounts have taken a financial hit with the current economic downturn.

One of them is 29-year-old businessman Anthony Mongeluzo of Evesham.

"People are going to get a very bad surprise if they're just relying on that check. I don't think it's going to be there," Mongeluzo said.

Right now the program is paying out more than it is bringing in, according to the Social Security board of trustees. That will change between 2012 and 2014, the board said, but expenditures permanently will exceed revenues in 2015, one year earlier than estimated in a report issued last year by the department.

Although program administrators acknowledge that the system isn't perfect, they're quick to add that it's not broken, either. Research shows both young and old still strongly support Social Security.

The fact that it's lasted 75 years proves the program's staying power, said Edward Lafferty, public affairs specialist for the Social Security Administration.

"The program's missions have expanded in response to changes and challenges within society," Lafferty said. "And, frankly, it continues to respond. It's not about the numbers, but the men, women and children who are often very needy getting benefits in desperate conditions."

From a program signed into law by President Franklin D. Roosevelt in 1935 originally for retired workers, the plan now also provides monthly income to widows, widowers, survivors and the disabled.

Postal workers delivered Social Security cards to about 222,000 people in 1940. Now, the more than 50 million people, or one in seven Americans, who use the system have online access. And average monthly benefits have increased from $22.50 to $1,100, with a total of $675 billion paid out in 2009.

Half of elderly married couples using the program receive 52 percent of their income from Social Security, as do almost 75 percent of elderly single people such as 78-year-old Joe O'Donnell of Bensalem, Pa.

"You get that check every month and you don't have to worry about your income," he said, "but I think it'd be great if they would increase more money for seniors, because if you have to depend on just what they give you, it makes it quite difficult."

O'Donnell doesn't rely solely on Social Security. He also receives a small Teamsters pension and splits the mortgage payments with his daughter.

For many people, though, such pensions are disappearing and the stock market is erratic. So, people are seeing Social Security as their own personal retirement system instead of planning for themselves, said Bruce Rader, an assistant professor of finance at Temple University in Philadelphia and a chartered financial analyst.

Even if employment — and, therefore, payroll tax collections — increases, more baby boomers reaching retirement age will mean larger deficits for the program, Rader said.

"People in my generation (the baby boomers) have paid in more than we're going to get out. We aren't going to get a very good return on our investment," he said. "And that's what people are worried about."

As far as fixing the system, reform proposals include raising the retirement age to 70, changing the formula for calculating annual inflation adjustments, and lifting the cap on the amount of wages taxed, which is $106,800.

Congressman Patrick Murphy, a Bucks County (Pa.) Democrat, said he would oppose any movement to privatize the program as proposed in the past, saying that would destroy Social Security's "safety net and put seniors' retirements in the hands of Wall Street."

"Social Security is an American success story," Murphy said. "Year in and year out, it has been there for millions of seniors. Its dependability and its security is something every American can count on."

Lifting the cap on the amount of wages taxed doesn't sound like a bad idea to Robin Stelly, field coordinator for Penn Action, an issues advocacy group. But her organization doesn't support raising the retirement age or cutting benefits to fix the deficit.

"We're working to get the word out that Social Security is fine and there's no need to panic," Stelly said. "Any fixes that need to be made can be easily found and don't need to be done right now. We can leave it alone and find reductions in other places. It's really OK. We're not saying do nothing, but if it's a choice between do nothing and making cuts for the deficit, we say do nothing now and wait until cooler heads prevail."

A similar group, New Jersey Citizen Action, also released a study this week showing how much Social Security has benefited residents.

Still, young businessmen such as Mongeluzo of Evesham are worried.

"Realistically, it's money going out the door for anyone 35, 40 or younger," said Mongeluzo, who owns a few technology and real estate companies.

Either way, the fate of Social Security rests in the hands of the average citizen, Lafferty said.

"It's your program," he said. "You'll decide what we should respond to, what the needs and challenges are. But as long as we have employers and employees paying taxes, it will be here."

Top Top | NJCA Homepage | NJCA in the News