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Seniors braced for benefits freeze

Social Security increase delayed till at least 2012

Bette Baldwin, Jack Dawson, and Dorcas Eppright talked about finances at a Boca Raton, Fla., retirement community. Bette Baldwin, Jack Dawson, and Dorcas Eppright talked about finances at a Boca Raton, Fla., retirement community. (Wilfredo Lee/ Associated Press)
By Matt Sedensky
Associated Press / October 12, 2010

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BOCA RATON, Fla. — Seniors prepared to cut back on everything from food to charitable donations to whiskey as the news spread yesterday that they will have to wait until at least 2012 to see their Social Security checks increase.

The government is expected to announce this week that more than 58 million Social Security recipients will go through a second straight year without an increase in monthly benefits. This year was the first without an increase since automatic adjustments for inflation started in 1975.

“I think it’s disgusting,’’ said Paul McNeil, 69, a retired state worker from Warwick, R.I., who said his food and utility costs have gone up but his income has not. He lamented decisions by lawmakers that he said do not favor seniors.

“They’ve got this idea that they’ve got to save money and basically they want to take it out of the people that will give them the least resistance,’’ he said.

Current politicians are not really to blame because cost-of-living adjustments are automatically set by a measure adopted by Congress in the 1970s that orders raises based on the Consumer Price Index, which measures inflation.

If inflation is negative, as it was in 2009 and 2010, payments remain unchanged. The frozen checks will be made official Friday, when the Bureau of Labor Statistics releases inflation estimates for September.

Still, seniors like McNeil said they will be thinking about the issue when they go to vote, and analysts said the news comes at a bad time for Democrats already facing potentially big losses on Election Day. Seniors are the most loyal of voters, and their support is especially important during midterm elections, when turnout is generally lower.

“If you’re the ruling party, this is not the sort of thing you want to have happening two weeks before an election,’’ said Andrew Biggs, a former deputy commissioner at the Social Security Administration and now a resident scholar at the American Enterprise Institute.

At St. Andrews Estates North, a Boca Raton retirement community, seniors largely took the news in stride, saying they don’t blame Washington for the lack of an increase. Most are also collecting pensions or other income, but even so, they prepared to tighten their belts.

Bette Baldwin won’t be able to travel or help her children as much. Dorcas Eppright will give less to charity. Jack Dawson will buy cheap whiskey instead of his beloved Canadian Club.

“For people who have worked their whole life and tried to scrimp and save and try to provide for themselves, it’s difficult to see that support system might not sustain you,’’ said Baldwin, a 63-year-old retired teacher.

Baldwin and her husband mapped out their retirements, carefully calculating their income based on their pensions and Social Security checks. The trouble is, they expected an annual cost-of-living increase.

“When we cut back, we’re cutting back on niceties,’’ Baldwin said. “But there are other people that don’t have anything to cut back on. They’re cutting back on food and shelter.’’

Many at St. Andrews said the cost-of-living decision won’t affect whom they vote for next month. But seniors tied the Social Security issue to what they see as a larger societal problem with debt, entitlements and hopefulness for the future.

“I’m kind of glad in a way,’’ Stella Wehrly, an 86-year-old retired secretary, said of the freeze. “One thing depends on the other and when people aren’t working there’s not enough people feeding into the Social Security system.’’

Wehrly and her husband, Hank, said curtailing government spending is necessary to maintain the Social Security system.

“We have a generation now that we’re not going to leave a very good legacy for,’’ she said.

Jack Dawson, 77, said the freeze is the right move considering the state of the government and the American economy.

“Who would be surprised what’s happened?’’ he asked. “I feel this is the right decision in light of the malaise.’’

More than 58.7 million people rely on Social Security checks that average $1,072 monthly. It was the primary source of income for 64 percent of retirees who got benefits in 2008; one-third relied on Social Security for at least 90 percent of their income.

Social Security payments increased by 5.8 percent in 2009, the largest increase in 27 years, after energy prices spiked in 2008, then quickly dropped. As a result, Social Security recipients got an increase in 2009 that was far larger than actual inflation. However, they won’t get another increase until inflation exceeds the level measured in 2008.