Mom and Dad never felt insecure about Social Security
My checks have been in the mail (electronically) for 17 years, but what about my stepsons and grandkids?
One of the prized mementos I saved of my father was his Social Security card, issued December 7, 1936, just after enactment of the revolutionary program that became a highlight of FDR’s New Deal and endures today as a model of progressive legislation — although one needing periodic adjustments because of shifting demographic, actuarial, and fiscal realities.
Social Security occupies the unique if somewhat problematic niche as the “third rail” of American politics, but its impact has undeniably touched the lives of the last four generations in ways unimagined by the elderly or disabled of previous eras, when to grow old was to grow helpless and hollow.
None of this was on Dad’s mind when he entered the workforce as a youngster just before World War I. His father had abandoned a family of three siblings, but Dad managed to put himself through the University of Buffalo College of Pharmacy during the Roaring Twenties and rode out the Great Depression as owner of drugstores in Brooklyn and as a pharmaceutical rep. He was proud of his Social Security card when it arrived in the first tranche of mailings, and he paid into the fund for decades, both as an employee and later as an employer.
As a matter of fact, 1936-37 proved a significant period for my parents in other ways. Although the nation slid back into what has been termed the Roosevelt Recession because of FDR’s abortive attempt to pack the Supreme Court and his sudden concern over balancing the budget, Stuart and Minnie Adelman Lazarus still were able to buy their first home, a new one, for about $7,500, with an under-3% mortgage, in Flushing, Queens. And they also purchased a car at the same time.
Mom had arrived in her mother’s arms as an infant immigrant from Ukraine in 1905. By now, she had obtained a master’s degree and maintained a network of professional affiliations. Dad, born in 1903, was first-generation and first in his family with a college education, although he never forgot his roots or abandoned his work-ethic sensibilities. As a couple, especially an assimilated Jewish couple, they had passed three mileposts on the road to the American dream — higher education, home ownership, and retirement income — in the very compressed time frame of 35 years. And this as the U.S. tried to regain its economic footing and against a backdrop of war clouds gathering over Europe (again) and Asia.
Years later, my father began drawing Social Security benefits after selling his pharmaceutical firm and retiring. Mom, a teacher and social worker who left the field when I was adopted in 1942, had too few working years to become deeply invested in the program, which in the beginning excluded certain segments of society, including farmers and housewives. But in 1939, spouses and children of retired workers were put under its umbrella, the first of many such expansions, resulting today in about 95% of the population being enrolled.
Both my parents enthusiastically supported Social Security, formally known as the Old-Age, Survivors, and Disability Insurance. Neither questioned if it smacked of socialism as Republican critics fumed at the time (and still do; they’re perhaps technically correct, but, oh, so misguidedly) or fretted about its long-term solvency. They didn’t have to: Back in the day, the numbers underpinning the system mostly landed on the plus side of the ledger. The term Baby Boomers hadn’t been conceived yet (yes, I’m punning in every sense of the word), and the population curve hadn’t been flattened on the back end by Millennials, with all the generational alphabet cohorts in between.
To provide a funding mechanism for this national initiative into unchartered waters, Congress passed the Federal Insurance Contributions Act (known universally and blandly as FICA). An initial 2% payroll tax was stipulated, with 1% matched evenly by workers and employers on earnings up to $3,000 annually. The current rate, after a series of hikes over decades, is pegged at 7.62% for the worker-employer match on yearly income up to $160,000. Of this amount, 6.2% is dedicated to Social Security, with 1.45% going to Medicare.
In addition to higher withholding, several significant Social Security changes involved introduction of COLAs, or cost of living adjustments, in 1951 (this year’s COLA works out to 8.7% when indexed to last year’s soaring inflation); allowing early retirement at age 62 with reduced benefits, adopted in 1961; adding payments for disabled workers and dependents in 1974; and subjecting the benefits themselves to taxes in 1983 (critics call this a double tax). Monthly checks are expected to average $1,827 this year for 65 million recipients in the three main categories of retirement income, disability aid, and supplemental support.
I recall the time, 17 years ago, when I was nearly 64 and considering a buyout from the Star-Ledger, where I had been an editor for almost 40 years. Although my preference would have been to work until the full retirement age — 65 years and 10 months — the buyout was both attractive and time sensitive. I made an appointment with the Social Security office in Montclair and a counselor helped me navigate the math. He explained that by taking the slightly reduced amount immediately, I still would be ahead on payouts for 13 years before the full rate would catch up, and that the difference going forward would be slight, obscured even more by COLAs added to the base.
Talk about dice-rolling situations. I flashed back to the day in the mid-1950s when as a teen I applied for my Social Security card, feeling really grown-up about it. It was a definite rite of passage. But in the present moment, I thought only about leaving a profession I loved after years of good karma, not the possibility of holding out for an 8% automatic jump in my Social Security checks for each year I deferred past full retirement age, or of even trying to play the longevity odds (something we mere mortals aren’t very good at).
I committed to taking the reduced benefit on the spot, and I am still fortunate to be a recipient of its largesse all these years later. The decision was made easier by knowing at the time that I also qualified for a generous pension and medical benefits and that my wife would soon retire as a teacher with her own set of coverages. Both of us feel incredibly fortunate to be in a position where Social Security cushions our other funding streams. Unfortunately, too many retirees are forced to rely on their checks as a sole source of income, although the program was never designed for that purpose. Nor was it meant to be thought of as a personal savings account with money taken out (benefits) equal to the money put in (taxes).
My relatively comfortable situation, however, may be symptomatic of the long-term challenge to the program’s viability. In a cruel irony, advances in science and medicine are not necessarily the healthiest outcome for Social Security. When it was inaugurated with my parents in mind, life expectancy averaged 64 years. (Mom lived to 70, Dad to 76.) It now has climbed to the high 70s for men and the low 80s for women, even factoring in the slight dip as a result of the covid pandemic. The result: More people now 65, 66, or 67, living longer in retirement, drawing higher COLA-enhanced benefits, all supported by a shrinking number of workers.
While there are obvious solutions to this dilemma, the political bipartisanship needed to reset the system (similar to what was done in 1983) is less apparent. It seems inevitable that the full retirement age will have to rise, possibly to 69, with accompanying increases in the worker-employer match, and a higher ceiling on taxable earnings. Without these fundamental tweaks, most experts feel Social Security will reach stress levels by 2034 and be able to pay only 80% of benefits. Medicare will need a similar fix at about the same time.
Maybe that’s why I’m now taking unusual interest in what’s happening in France, as the nation goes through convulsions after President Emmanuel Macron unilaterally raised the retirement age to 64 from 62. Macron bypassed the National Assembly and its legislative prerogatives, touching off violent protests that now are in their second month and reaching every prefecture of the country. Postal and transport services have been crippled, municipal buildings damaged, and uncollected garbage litters the boulevards of Paris.
If Macron’s decree sticks, France still will offer one of the most generous retirement packages in Europe. Of course, he’s perfectly correct in enacting the change, since the national system is overburdened with payouts and a shrinking worker base. But his Louis XIV approach did not sit well with the citizens of the Fifth Republic, who obviously seem more concerned with joie de vivre than the realities of productivity, longevity, and fiscal integrity. (Rhymes nicely with liberty, egality, and fraternity.)
I’ve never pretended to understand the French or wanted to dig deeper into their national psyche. But what they and work-obsessed Americans do have in common are two retirement systems both at risk in the short and long terms. Stuart and Minnie Lazarus and Jonathan and Gail Lazarus never had to worry about the possibilities that confront my stepsons and grandchildren and their retirements if the fix isn’t put in for Social Security — and soon.