Achieving Social Security Equity For Black And Hispanic Americans

     From How Can Changes to Social Security Improve Benefits for Black and Hispanic Beneficiaries? by Richard W. Johnson and Karen E. Smith:

• ... Racial and ethnic differences in annual and lifetime Social Security benefits are substantial. We project that average lifetime benefits received by adults born between 2001 and 2010 are 19 percent less for Black beneficiaries than white beneficiaries and 14 percent less for Hispanic beneficiaries than white beneficiaries. Black and Hispanic beneficiaries ages 62 and older in 2080 are projected to be about 10 percentage points more likely to receive limited incomes in 2080 than white beneficiaries. 
• Various benefit enhancements, including creating caregiver credits, making the benefit formula more progressive, and adding a new minimum benefit to Social Security, would disproportionately help Black and Hispanic beneficiaries. 
• However, these benefit enhancements would only modestly narrow racial and ethnic disparities in Social Security benefits. Adding a new minimum benefit tied to years of covered employment would have a particularly modest effect, because relatively few beneficiaries receiving limited benefits complete long careers. 

The policy implications of the findings are: 

• The effectiveness of benefit enhancements depends crucially on how those adjustments are structured. Policy details, including eligibility for the enhanced benefit and the presence of any benefit caps, shape how much low-income beneficiaries would receive and how well targeted the adjustments are.
• Achieving equity in Social Security benefits for Black and Hispanic adults would likely require substantial progress toward equality in labor market outcomes. ...
  

Problems With Retirement Earnings Test

     From The Social Security Administration’s Enforcement of the Earnings Test, a report by Social Security's Office of Inspector General:

The earnings test is a provision of the Social Security Act that requires that SSA withhold payments from beneficiaries who are under full retirement age (FRA) if their earnings exceed a certain limit. ...

SSA did not accurately or timely pay beneficiaries subject to the earnings test. As a result, we estimate SSA:

• inaccurately calculated approximately 47,000 of the 294,000 earnings-test overpayments established in FY 2021, totaling more than $148 million;
• inaccurately paid approximately 9,000 beneficiaries approximately $29 million based on estimated earnings that were more or less than their actual earnings; and
• did not timely pay approximately 176,000 beneficiaries approximately $81 million in monthly benefit increases. ...

    And to think that the retirement earnings test used to apply to all retirees regardless of age.

U.S. Retirement Systems Score Poorly

     From Michael Hiltzik writing for the Los Angeles Times:

Back in my school days, a “C” grade was a certification of rank mediocrity. That’s the right way to think about a recent scorecard on which the U.S. retirement system scored an inexcusably deficient C+.

That grade placed the U.S. behind Netherlands, Iceland and Israel (all A’s); and Australia, Belgium, Britain, Canada, Finland, Germany, Ireland, New Zealand, Norway, Portugal, Sweden and Switzerland (all solid B’s or B+). If you’re looking for bragging rights, the U.S. came in about even with France.

The scores come to us from the business consulting firm Mercer, which ranked 47 national pension systems for its Global Pension Index on standards such as adequacy, sustainability (including the reliability of funding) and integrity (such as the regulation of private pension providers). ...

Among the particular shortcomings of the American system identified by the Mercer team is that it leaves too many workers out in the cold, including gig workers and lower-income blue-collar employees. ...

But if you’re hoping that things will improve for American retirees in the near future, the accession of Rep. Mike Johnson (R-La.) to the post of House speaker should give you pause. Johnson is a long-term advocate of cutting Social Security and Medicare benefits through changes such as raising the retirement and eligibility ages for the programs.

He also has advocated scrutinizing the cost of those programs through a “bipartisan debt commission” that inevitably would place them in the deficit-reduction cauldron along with other spending. After his rise to the speaker’s chair Wednesday, Johnson immediately promised to create this panel. ...

Age At Which Workers Claim Social Security Retirement Benefits

      From The Motley Fool:

• Age 62: 29.3%
• Age 63: 7.4%
• Age 64: 8%
• Age 65: 12.7%
• Age 66: 24.7%
• Age 67: 3.9%
• Age 68: 2.3%
• Age 69: 2.1%
• Age 70 (or above): 9.6%

Early Retirement And Disability

     From Kaiser Health News:

... Every year, tens of thousands of people who are disabled and unable to work consider taking early retirement benefits from Social Security. The underfunded federal disability system acknowledges that it is stymied by delays and dysfunction, even as over 1 million people await a decision on their benefits application.

The United States, which has one of the least generous disability programs among developed Western nations, denies most initial claims, leaving applicants to endure a lengthy appeals process. ...

"They don't have the luxury of waiting," said Charles T. Hall, a disability attorney based in Raleigh, North Carolina. "The vast majority of people need the money now, and you can get early retirement benefits in two months or less." ...

Most callers to the Social Security Administration are unable to reach an agent, and people seeking local field office assistance with an application can wait at least a month for an appointment ...

In a written statement, Social Security Administration spokesperson Darren Lutz acknowledged that wait times are "far too long," citing inconsistent and insufficient funding, staffing shortages, and other challenges. The agency refused to make officials available for a phone call to discuss the issue in more detail.

Caught in the tangle of dysfunction are disabled people with little or no income, who often take early retirement because they are struggling to pay for basics like housing, food, and medicine. In some cases, people end up homeless or die waiting for their disability benefits, lawyers told KFF Health News. ...

You Ought To Get All Of These Right If You're A Social Security Employee

    Mass Mutual put together a Social Security quiz for those approaching retirement age. See how you do.

    True or False:

1. In most cases, if I take benefits before my full retirement age, they will be reduced for early filing.
2. If I am receiving benefits before my full retirement age and continue to work, my benefits might be reduced based on how much I make.
3. If I have a spouse, he or she can receive benefits from my record even if he or she has no individual earnings history.
4. Generally, if I am in a same-sex marriage, there are different eligibility requirements when it comes to Social Security retirement benefits.
5. If I have a spouse and he or she passes away, I will receive both my full benefit and my deceased spouse’s full benefit.
6. The money that comes out of my paycheck for Social Security goes into a specific account for me and remains there, earning interest, until I begin to receive Social Security benefits.
7. If I file for retirement benefits and have dependent children aged 18 or younger, they also may qualify for Social Security benefits.
8. If I get divorced, I might be able to collect Social Security benefits based on my ex-spouse’s Social Security earnings history.
9. Under current law, Social Security benefits could be reduced by 20% or more for everyone by 2035.
10. Under current Social Security law, full retirement age is 65 no matter when you were born.
11. If I delay taking Social Security benefits past the age of 70, I will continue to get delayed retirement credit increases each year I wait.
12. Social Security retirement benefits are subject to income tax just like withdrawals from a traditional IRA account.
13. I must be a U.S. citizen to collect Social Security retirement benefits.
    

    And the answers:

1. True (84% answered correctly)
2. True (77%)
3. True (72%)
4. False (69%)
5. False (65%)
6. False (60%)
7. True (56%)
8. True (56%)
9. True (55%)
10. False (53%)
11. False (49%)
12. False (38%)
13. False (29%)

Every Bad Idea For Social Security That The GOP Has Ever Had, In One Document

    Republicans in the House of Representatives have put forth their plan for what that they hope to extort from the President by threatening to put the U.S. government into default on its debts. Here's what their plan would do to Social Security retirement benefits (begins at page 80):

• Implement a new minimum benefit of 15% of the average wage index;
• "Modernize" the Social Security benefit formula, which is a euphemism for reducing future benefits for those now 54 and younger;
• Increase Full Retirement Age to 70 between now and 2040;
• Eliminate the retirement earnings test for those who are under Full Retirement Age;
• Eliminate auxiliary benefits for high wage earners.
  

    The plan also includes changes in disability benefits (begins at page 74):

• Enact a benefits offset experiment that would reduce disability benefits by $1 for every $2 earned (they must not know that this experiment is underway already);
• Allow FICA reductions for employers with high rates of employee retention, which is supposed to help handicapped people stay employed (which would disadvantage manufacturers);
• Require employment in six of the last ten years, instead of five;
• Time limited disability benefits for some recipients; 
• "Update" the grid regulations;
• Make disability benefits contingent on medical improvement (I don't think they meant to say that but that's what they said);
• Prevent those drawing unemployment benefits from drawing disability benefits;
• Eliminate withholding of attorney fees for representing claimants (at least I think that's what they're saying but they only thing clear about it is that they bear a lot of ill will towards attorneys);
• Close the record "after a reasonable period of time";
• Require Social Security to conduct periodic reviews of ALJ decisions, particularly those of "outlier" judges;
• Prohibit reapplications within 12 months of a denial;
• Increase the waiting period for Medicare from 24 months to 60 months;
• Eliminate the ability to apply for both early retirement and disability benefits at the same time;
• Allow employers and employees a reduced FICA rate if the employer provides long term disability benefits.

No Social Security For Trump

     I took a look at Donald Trump’s recently released tax returns. Despite being well past age 70, he hasn’t reported Social Security benefit payments. Maybe he didn’t bother to apply. Maybe he didn’t have a history of wages that would qualify him. For that matter, Melania isn’t receiving Social Security benefits either but she’s only 52.

     Trump is so grasping, it would be hard for me to imagine him not reaching out for the income but he’s so incompetent I can suppose it wouldn’t have occurred to him.

     By the way, please, if you’re a Social Security employee, don’t try to look up Trump’s earnings record. You won’t succeed but you will be fired.

     Also by the way, President Biden is receiving Social Security retirement benefits.

Have The Courage Of Your Convictions, GOP

      From Joseph Chamie writing for The Hill:

Despite an expected backlash, vocal objections and possible threats, it’s time to raise America’s Social Security retirement age to 70 years with no early retirement option.

There are important reasons for America to raise Social Security’s retirement age to 70 and do away with early retirement with reduced benefits, which about half of the recipients are currently choosing before reaching full retirement age.

The first has to do with the fact that Social Security is  projected to be insolvent by 2035. In its 2022 annual report, the Social Security Board of Trustees concluded that if no changes are made, the program will not be able to meet its financial responsibilities by 2035.

A second reason for raising the retirement age to 70 centers on the increasing life expectancies of Americans that have occurred over the recent past. …

     I think that once they get control of the House of Representatives next year the Republicans should bring this proposal to a vote. 

Covid And Retirement

      From How Does COVID-Induced Early Retirement Compare to the Great Recession?, a study by Anqi Chen, Siyan Liu, and Alicia H. Munnell for the Center for Retirement Research at Boston College:

The paper found that:

• Self-reported poor health did not lead to increased claiming during COVID, a story consistent with the Great Recession. 
• The booming stock market associated with COVID induced early claiming among those with retirement assets, a stark difference from the Great Recession where workers remained to replenish depleted balances. 
• On the other hand, generous UI benefits reduced early claiming for workers in the two lowest earnings terciles, a stark difference from the Great Recession where the lower paid continued to retire earlier than the well paid. 
• In the end, and in contrast to the Great Recession, the competing effects more than canceled each other out and resulted in an actual decrease in early claiming during the COVID Recession and slightly higher monthly Social Security benefits.

Retirement Trends

    From Retirement Trends in United States, 2000-2022, a report by the Congressional Research Service at the Library of Congress.

Click on image to view full size

What Does It Tell You If Less Than Half Of People File Their Social Security Retirement Claims Online?

      From a piece by Alicia Munnell, the director of the Boston College Center for Retirement Research for Market Watch:

The Social Security Administration faces an enormous challenge to maintain its services as retiring baby boomers increase the demand and budget constraints and retiring staff limit the agency’s capacity to deliver.  ...

To investigate how individuals claimed or intend to claim their retirement benefits, my colleague JP Aubry surveyed 2,600 people ages 57-70. The responses showed that, while 60% of respondents applied or intend to apply online (a somewhat higher share than the SSA data show), only 43% of respondents claim completely online — that is, without contacting SSA in-person or by phone. Scaling the survey results to the SSA data for online applications suggests that 37% of retirees claim completely online  ...

To better understand the factors associated with online claiming patterns, JP estimated a regression that relates respondents’ demographic characteristics to full online claiming (see Figure 3). Two of the characteristics most associated with claiming completely online are the use of online banking and Turbo Tax — both of which are proxies for a high level of comfort with online financial tools. Additionally, claiming completely online is associated with living in a metropolitan area, being college educated, and being married. On the other hand, the characteristics most associated with not claiming completely online are — essentially — being nonwhite. ...

In response to in-depth questioning, respondents identified four reasons for contacting an SSA representative: 1) complex issues that clearly require an SSA representative, such as discussing the specifics of spousal and survivor benefits; 2) general aversions to online services, like a concern about data privacy; 3) straightforward inquiries that could be addressed without contacting a representative, like checking the benefit amount and eligibility; and 4) obstacles to online claiming that could be remedied by SSA service improvements, such as fixing data errors.  ...

     Note that this piece concerns retirement claims, not the more complicated survivor claims, not to mention the vastly more complicated disability and SSI claims.

Delays In Filing Retirement Claims

      The Washington Post has an article out displaying a couple of charts that they say show that during the pandemic people have been retiring but deliberately delaying claiming Social Security retirement benefits. Here's one of the charts:

     The thing about it is that there's been a similar decline in the number of SSI claims filed and there's no benefit whatsoever in delaying filing an SSI claim. One possibility is that office closures and the increased difficulty in reaching Social Security by telephone have caused people to delay filing claims out of frustration. People don't have to be deterred entirely or even for long to produce something like this graph. Just deter a certain percentage of claims for a month to three months and you end up with fewer claims filed for a time period. My experience is that few people are crafty about the date they file their retirement claim. That sort of behavior exists mostly in the minds of newspaper writers who are overly invested in the idea that simplistic economic theories explain human behavior. They don't factor in the service environment at Social Security.

Problem Avoided

 

     From the Detroit Free Press:

The pandemic-related economic shutdown in 2020 triggered all sorts of anxiety, including oddly enough a fear that those who turn 62 next year would be stuck with drastic cuts to their Social Security benefits. ...

The reason? A key wage index that Social Security uses as part of the calculation of benefits looked like it was set to plummet during the 2020 economic slowdown. 

In Congressional testimony in July 2020, Social Security Administration Chief Actuary Stephen Goss suggested that benefits could be 9.1% lower for this specific group, for life. ...

Now, amazingly, there is good news for those baby boomers born in 1960. Things didn't turn out as horrible as the original headlines suggested.

The average wage index — which is calculated by Social Security to track wage growth in the overall economy — didn't fall as once projected. Instead, the Social Security Administration recently posted that the national average wage index was up 2.83% in 2020 from 2019 — not down.  ...

Retirement Benefits Slowdown

      From Bloomberg News:

The rate of growth in retired Americans who collect Social Security has slowed down sharply, and the drop may be due in part to the disproportionate number of deaths from Covid-19 among the elderly.

The number of people who received retirement benefits from the Social Security Administration rose 900,000 to 46.4 million in March, the smallest year-over-year gain since April 2009.

While the Office of the Chief Actuary at the government agency said it is still too early to assess the impact from Covid-19, the year-over-year change appears to reflect excess deaths. About 447,000 people who died from the virus were 65 or older, according to data from the Centers for Disease Control and Prevention, or about 80% of total deaths. ...

     I'm with the Office of Chief Actuary. Deaths among retirees may not be the only thing going on. Remember that the number of SSI claims filed is down sharply. That is widely attributed to field office closures. There could also be a slowdown in the number of retirement claims filed due to field office closures. We know there's a slowdown in processing people onto benefits after claims are taken which would have the same effect. Also note that the weirdness in the chart in 2001 and 2002 with no Covid-19 to explain it.