SOCIAL INSECURITY     Without changes, today's youth pays for nothing. written by Marcella Castellanos, Vicky Graham and Dena Venegas photos by Vicky Graham With one eyebrow raised and a look of frustration on her face, a 22-year-old girl looks bewildered as she examines the deductions in her paycheck stub. "Where is all of this going?" she asks herself. Approximately 30 years from now, 10 years shy of eligibility for retirement, she will ask herself where it all went. She thinks of the many days of hard work and money she put into a system that promises she will some day get back. She faces a rude awakening. With taxes taken out for Medicare, FICA, OASDI and other indecipherable terms, the future of the financial security for those in their 20s and 30s faces turmoil. Social Security basically works like this: while working, it is required to give a portion of every paycheck to the Social Security Administration. Upon retirement or disability, the Social Security Administration pays a monthly sum. Generally, the system is meant to work like a pension plan. When the individual is working, the money goes into the plan; upon retirement, the money comes out. A person can collect Social Security benefits as early as age 62 or as late as age 70. But many young people between the ages of 18 and 35 don't understand the concept of Social Security and it's the farthest thing from their minds. Natasha Ghaedi, 18, knows Social Security as the number assigned for identification. She knows it is a tax reserved for later retirement. But she doesn't know that unless there are changes, these funds will rapidly diminish in the years to come. "That's messed up," she says. "That means I will have to work until I die." Although Wally Betts has lived in San Francisco for nearly two decades, he's still a country boy at heart. Growing up on the foothills of the Ozark mountains in Arkansas, his family raised cattle, picked cotton and canned its own preserves by candlelight. When Betts retired 12 years ago, it came as no surprise that his plans were to include a home in the country, fishing, camping, hunting and relaxing. But after 30 years of working as a pharmacist at Rexall Drugs, the company gets sold and Betts' job, pension plan and dreams of country living diminish. "I earn $503 from Social Security and $157.40 from welfare," says Betts. "I almost went into a state of shock (when I received my check). It's a good thing I had a good heart then -- I think I would of had a heart attack." Like Betts, many Americans still hold an idealistic vision of retirement. But with the changing face of retirement income -- diminishing Social Security and the dwindling popularity of employer-sponsored pension plans -- the lazy, hazy days of retirement are becoming, for some, as far-fetched a dream as the fountain of youth. Prior to the turn of the 20th century, the majority of people in the United States lived and worked on farms, and economic security for the elderly was provided by the extended family. However, this arrangement changed as Americans went from the farm to the factory. Then the Great Depression struck, triggering a crisis in the nation's economic life. This was the backdrop from which the Social Security Act emerged. But initially it was only intended to be a temporary relief program that would eventually disappear as more people obtained retirement income through the contributory system. Less than 40 percent, or 33 million Americans 65 and older collect a pension, and the average recipient receives less than $10,000. Only half of all workers are in jobs where they earn credits toward pension plans. For the unlucky this means re-entering the work force. According to the Employee Benefit Research Institute, the number of elderly workers has held steady at 30.5 percent. "Seniors can't afford to just sit down and grow old," says Relio Bunag at the Renaissance Experience, a private job-placement program for seniors. "But placing seniors is difficult. Employers still have a stereotype about people being over the hill." Betts works at the Diamond Senior Center answering phones, filing and setting appointments. He works four hours a day and is paid a minimum wage stipend by the National Commission on Aging. Betts got a roommate to cut down on rent. His phone and electric bills are both subsidized by low-income federal programs. He gets his lunch at the senior center and has dinner at a neighbor's house almost every night. Although Betts has many medical problems, all his doctor visits and medications are paid for by welfare. His only other expense is paying for his funeral arrangements. Betts has vowed to return to the majestic mountains of Arkansas some day, even if it's only in death when his body will be sent home. Slim Hooey, 81, lives comfortably on $1,200 a month from Social Security. Hooey spent most of his working life as a sales representative and got his Social Security card in 1938, two years after Franklin D. Roosevelt signed the bill to enact the program. In his retirement, Hooey feeds stray cats, does a little garden work and goes to garage sales and doctor appointments. "When you get to be my age, it's patch, patch, patch," he says. "Social Security is a supplement," says Hooey. "It's more than enough money to live on because the house is paid off. But it would be impossible if I had to pay thousands of dollars a month for rent. Social Security was never meant to cover everything," he says. "I paid into the system my whole adult life. They owe me this money," Hooey says. "Everyone who works gets the FICA deduction. The baby-boomer generation is supposed to have paid in. If the government doesn't have the money, it's because they used the money to cover government bond sales and reduce the national debt." Of the total $1.53 trillion in federal expenditures in 1995, Social Security was the largest, accounting for nearly 22 percent. The figure is greater than the amount spent on all other entitlement programs combined, with the exception of Medicare. By 2005, spending is expected to almost double. More alarming, the baby-boom generation will begin retiring around 2010, causing the program to balloon stupendously. The term "baby boom" refers to the period of exceptionally high fertility between 1946 and 1964 following World War II. This year baby boomers are between the ages of 33 to 51 and according to a 1990 U.S. Census data estimate, there are about 80.9 million people in this age group. Without any changes to Social Security, those born in 1946 will be withdrawing from the program in 2011, with the youngest of the baby boomers to withdraw from Social Security 32 years from now. Once they start withdrawing instead of investing, it is predicted there will be a serious shortage of funds. According to San Francisco State University political science professor Jerry Heather, the reasons for the Social Security crisis are more people living longer and collecting more benefits than they paid in. They also require more health care, so Medicare expenditures, which are part of Social Security, are astronomical. "Part of President Clinton's health-care plan was to put a limit on doctors' fees and the amount of money pharmaceutical companies can charge for prescriptions," Heather says. "This would solve part of the problem by lowering Medicare costs. But the medical field lobbied hard against it and that's the reason Clinton's health-care plan didn't work." In regard to the other government uses of Social Security, Heather replies, "Well yes, they did use some of the trust fund to pay off the national debt, but they had to. Nobody in this country wants to pay higher taxes. Take Proposition 13 for example, where the people voted to limit the amount that government can raise property taxes to 3 percent a year. These same people bellyache when the libraries close and our public schools fall into disrepair." A solution to the funding crunch may be to raise the retirement age to 65 or 70. "The problem with this idea," says Chris Geddings, media-relations representative of the National Committee to Preserve Social Security, "is that people who do hard manual labor may not be physically able to keep working. We'd have to do health assessments and allow these people to retire at the earlier age. This wouldn't be fair to those with desk jobs who also want to retire. They would be penalized for being healthy." Hooey's in favor of assessing for need. "Why should millionaires be collecting Social Security?" he says. "I know people who are netting $6,000 a month from investments. They can't spend the money they have. And they're collecting $1,200 a month from Social Security. Both Medicare and Social Security would be adequate and sufficient if only those who needed it, drawed on it." Geddings disagrees with this idea. "If you work and pay into Social Security, you're entitled to the money. It's not fair to have all employees pay into the system and only allow some to draw benefits." The Social Security Board of Trustees has also been considering privatizing Social Security, where employees would instead be allowed to buy stocks with the money they would have paid into the system. Geddings thinks this is dangerous. "What would happen to people who make bad investments? How will they afford to retire?" she says. In her outlook, it seems the only possible way to guarantee the future of Social Security is to raise FICA taxes, and ultimately, it should be voted on by the people it will affect the most -- those currently in their 20s and 30s. "It's easy to say it's the government and unwise investments, nuclear investments, and always wanting to be a step ahead in technology when they [the government] really need to be taking care of people," says Tari Giering, 27, a retail-sales associate. "It's not an immediate concern of mine. Although I wish I had money to save after all of my daily living expenses." We are living a great deal longer than our grandparents and this is exacerbating the situation. When the framers of Social Security created the program in 1935 and chose 65 as the standard retirement age, the average life expectancy was only 61. So, Social Security was created with a shorter life span in mind. Today, the average life expectancy is 76 years, and by 2030 we are expected to live well into our 80s. Robert Scott, 32, chief executive officer of Odyssey Investments says many people have invested in stocks but not necessarily with retirement in mind. The value of stock holdings fluctuates so much it can't be viewed as a predictable source of future income. He says he recently started thinking about saving money for his old age because he is aware that the system is too inept to service the amounts of people that will require it in the future. "Besides, it's all a crock," he says. "A big meteor is going to crash onto the planet three days before I collect." Now that's optimism. |ISSUE #1|FEATURES|A&E|INVESTIGATIVE|GREEN WATCH| |NAKED TRUTH|IN MOTION|HEALTH|LIFESTYLES|FYI|INDEX|