Social Security nears 75th anniversary; financial situation not good

Between my social security income and my savings, I've been able to take care of myself and help my children's health problems because they can't get insurance. BBB

August 9, 2010
Social Security nears 75th anniversary
By Anita Creamer - Sacramento Bee
Published: Monday, Aug. 9, 2010

Evelyn Sekula's widowed grandmother struggled to survive during the Depression. Like millions of other elderly people, she had no pension and no savings.

"She had no income at all except for what my father gave her," said Sekula, 90, who lives at the Atria El Camino Gardens senior residence in Carmichael. "She was always looking for a way to make money. My father probably gave her $10 a month."

Today's older adults were children and teenagers when President Franklin D. Roosevelt changed the face of aging on Aug. 14, 1935, when he signed the Social Security Act into law.

They remember the difficult years when old age took place in a bleak, Dickensian landscape of need dotted with poor houses for those whose families couldn't support them. And they remember the difference that Social Security made in ordinary people's lives.

They also remember their parents' fears that Social Security amounted to socialism. Yet on the edge of the program's 75th anniversary, most of them can't imagine retirement without the small cushion of funds and dignity that Social Security provides.

As California Budget Project executive director Jean Ross says, Social Security lifted the elderly out of poverty – and as the most important source of income for most older Americans, it continues to do so.

But the recession has had a negative impact on Social Security, according to a trustees' report released Thursday: Reduced payroll taxes have resulted in Social Security's first projected annual deficit since 1983. Despite that, both the trustees and the Congressional Budget Office say that the program will remain solvent until 2037.

The huge demographic bubble of baby boomer retirees will take a toll on Social Security, as well. While there currently are 3.2 workers for each recipient, that number will drop to 2.1 by 2034, according to the Social Security Administration.

The 2010 trustees' report suggests that gradual increases in employment numbers, along with a new health insurance tax later this decade, will improve the program's financial picture.

Research consistently shows deep public support for Social Security, not only among the elderly but also among younger generations.

But without significant change – either through privatization into investment accounts, as some advocates say; or by raising the minimum age for full benefits and lifting the payroll tax cap on income above $106,800, as others suggest – the public remains plagued with concerns about Social Security's long-term viability.

Earlier this summer, House Republican Leader John Boehner questioned whether the federal government should be giving Social Security benefits to the wealthy. "If you have substantial, non-Social Security income while you're retired, why are we paying you?" he said in an interview with the Pittsburgh Tribune-Review.

The Ohio Republican also suggested raising the retirement age to 70.

"Our view is that Social Security is not perfect, but it's not broken," said AARP California's Ernie Powell. "The folks who want to do radical reform want to create doubts that Social Security will be there.

"It's important to give people a sense of its future. It's not in crisis, but there are reforms that we need to make to make sure its solvency continues beyond the 2040s."

For more than 51 million Americans – including disabled workers and children receiving survivor benefits – Social Security isn't a hot-button political talking point. It's survival.

The average benefit isn't much: only $1,100 a month. According to Social Security figures, half of elderly married couples receive 52 percent of their income from the program, as do almost 75 percent of elderly single people.

Without Social Security, 40 percent of Californians aged 65 and older would live in poverty.

"If it wasn't for Social Security, I'd be living under a bridge," said Jeneva Hammonds, 84, who worked seasonally as a Blue Diamond mechanic's helper.

Her $714 monthly Social Security check, along with her late husband's small railroad pension, helps pay for the room she occupies at Atria El Camino Gardens. Even so, she has to tap into her savings to pay for her rent, phone bill and heart medications.

Retirement these days can be tough enough with Social Security. Without it, would retirement even exist? For most people, probably not.

"Social Security was the first government program instituting the concept that we have a collective responsibility for each other," said American River College gerontology department Chairman Barbara Gillogly. "Before that, there was no real concept of retirement.

"Most people worked until they died or were too ill, and then they were at the mercy of their family and friends."

In the desperate 1930s, the elderly often ended up begging on the streets.

"A lot of older people in the Depression were starving to death," she said. "People with no other means of survival could go to poor farms. There were alms houses next to churches. It was demeaning."

For many decades, Sacramento County's poor farm and indigent cemetery were on the sprawling grounds of the county hospital, the site of today's UC Davis Medical Center on Stockton Boulevard.

The county home for aging indigent women was a large Victorian house nestled on the same acreage, remembers Sacramento native and longtime florist Al Balshor, 87, while the home for aging indigent men occupied a rambling brick estate on Franklin Boulevard near Florin.

"Mostly, people took care of their own," he said.

For those who couldn't, going to the county poor house was, as Sekula puts it, a sign of disgrace. Yet census records from the 1930s show that poor houses across the country were filled with people in their 60s, 70s and 80s.

"You went to the poor house if you were absolutely destitute," Sekula said. "Nobody wanted to go there."

Of the 6.5 million elderly Americans alive in 1935, only 350,000 had any sort of pension. The new Social Security Administration arbitrarily fixed retirement age at 65, based on European pension models from the 1880s that were predicated on a low life expectancy.

The government also hoped Social Security payments would stimulate the dismal late Depression economy by getting more money into circulation, says Gillogly.

Olivia Sparrevohn, 83, remembers that Social Security made a difference in her grandmother's life. Carrie King Cralle was 68 in 1935, a widow who worked as a secretary and cared for an invalid daughter.

Monthly Social Security payments didn't begin until 1940. Before that, recipients were paid a lump sum. Even so, by 1940, 1 million older Americans had received money from the program.

"Suddenly, my granny got this check," said Sparrevohn, a retired technical illustrator who lives in Elk Grove. "She was very frugal. I know that check was small, but I know it made a difference in her life.

"I can remember clearly that it was a big thing to her."

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