How the Election Impacts Social Security

Published in Woonsocket Call on July 24, 2016

On the final night of the Republican National Convention (RNC) an average of 32 million Americans tuned in to watch Donald J. Trump, a New York Real Estate Developer, author, television personality and now politician, formally accepted the GOP nomination for President of the United States.

After he delivered his July 21 speech, reporters, political commentators, and even postings trending on twitter called Trump’s hour and 15 minute speech (4,400 words) “dark” because of its stark tone and content. This GOP presidential candidate’s speech was even referred to as being the longest acceptance speech in history since 1972.

Before more than 2,400 delegates Trump, 70, pledged to be the nation’s law and order president who would crack down on crime and violence. America first would be Trump’s mantra during the negotiation of international trade deals and the existing NAFTA trade accord would be renegotiated.

Trump also called for defending the nation’s borders against illegal immigrants and giving parents more choice in choosing schools for their children. And to the forgotten men and woman across the country who were laid-off because of President Obama’s mishandling of the economy Trump promised to be their voice. Syrian refugees would be vetted and only those individuals who “will support our values and love our people” will be admitted, he said.

Trump Ignores Social Security in Speech

Aging advocates say that Trump’s acceptance speech was short on details when it can to domestic policy, specifically Social Security and Medicare. But, you won’t need tea leaves to read how a future Trump Administration will change the way the nation supports its retirees. .

According to Max Richtman, President and CEO of the National Committee to Preserve Social Security and Medicare (NCPSSM), the choice of Governor Mike Pence as Trump’s running mate should send “a very clear message to America’s seniors that their priorities will hold little weight in a Trump administration.” While Trump has promised on the campaign trail that he won’t cut Social Security and Medicare.

During his 12 years serving as a U.S. Congressman, Pence consistently voted in favor of GOP legislative efforts to cut benefits in Social Security, Medicare and Medicaid, says Richtman, charging that Trump’s vice presidential running mate is one of a few Congressional lawmakers that has a strong “anti-seniors voting record.”

Richtman says that “Mike Pence was one of Congress’ biggest proponents of privatization. He supports cutting Social Security benefits by raising the retirement age, reducing the COLA, means-testing and turning Medicare into “CouponCare.” As he told CNN, ‘I’m an all of the above guy. I think we need to look at everything that’s on the menu,’ and the record shows he has done just that by supporting every form of Social Security, Medicare and Medicaid benefit cut proposed in the past decade.”

While Trump has promised not to cut Social Security benefits on his year-long campaign trail, he continues to surround himself with advisors who are “polar opposite” of his positions says Richtman. “They say actions speak louder than words — Donald Trump’s choice of Mike Pence as his Vice-Presidential running mate will speak volumes to American seniors,” he adds.

Political Experts Weigh in

Darrell M. West, Ph.D., Vice President and Director of Governance Studies at the Brookings Institution, says that “Trump is on record as saying he does not want to cut Social Security so that is considerably different from most Republican leaders, who support benefit reductions as a way to balance its books. This probably is the reason the [GOP] platform is vague on Social Security. The party could not reconcile Trump’s view on not cutting benefits with the party’s general view that cuts are needed. That left them with a reference to market solutions without explaining what that meant.”

“Party leaders have said they want to raise the retirement age for people under age 50. That issue certainly would be on the issue in a Trump presidency although it is not clear how he views that issue. But there would be significant support in a GOP-run Congress for doing that and cutting the benefits of future retirees,” adds West.

West believes that “Democrats have a very good chance of recapturing control of the Senate. If that happens, that will allow them to block benefit reductions or raising the retirement age, he says.

Wendy Schiller, professor and chair, Department of Political Science at Brown University, warns that talking about changing Social Security can be risky and this “involves a depth of knowledge about entitlement financing that eludes most political candidates especially those without any political experience.”

The Brown professor of politics does not see Trump tackling this issue in any meaningful way in the campaign and she does not believe it will be a priority for him or the GOP if he wins. “Recall George W. Bush tried to reform Social Security immediately after he won reelection in 2004 – by late January 2005 it was dead on arrival in Congress,” she says.

“Overall I am not sure the GOP leadership in the Congress has fully processed what a Trump presidency would look like in terms of policy or what his priorities might be. It is unclear to me that they will align closely and getting anything through Congress these days is nearly impossible, no matter who sits in the Oval Office,” she adds.

Stark Differences in Platforms to Fix Social Security

On Friday, the released Democratic Platform released reveal a stark difference as how to the Democratic and Republican parties will fix the ailing Social Security program. The GOP platform. Although current retirees and those close to retirement will receive their benefits, changes are looming with a Trump administration and a Republican-controlled Congress. For younger generations all benefit cut options to be put on the table, opposing the lifting of the payroll tax cap and sees privatization of Social Security as a way for older American’s to create wealth for use in retirement. On the other hand, the Democratic Party platform calls for a strengthening and expansion of the existing Social Security program. The Democrats oppose any attempts to “cut, privatize or weaken” Social Security, and calls for lifting the payroll tax and exploring a new COLA formula.

NCPSSM’s Richtman notes “ It’s also very telling that while the GOP buried their cuts and privatization plans for Social Security under the Platform’s Government Reform heading, the Democrats addressed Social Security, as they should, as part of their plan to restore economic security for average Americans. That’s been Social Security’s fundamental role for more than 80 years — providing an economic lifeline impacting the lives of virtually every American family.”

As AARP’s John Hishta noted in his July 22 blog, even though the “political spotlight was not on Social Security” at the RNC in Cleveland, delegates, rank-and-file politicians and even political operatives that he talked with clearly understand the programs importance to retirees and younger generations.

“If political leaders fail to act, future retirees could lose up to $10,000 a year. All beneficiaries could face a nearly 25 percent cut in their benefit,” warns Hishta. .

Hishta tells his blog readers that “AARP’s Take a Stand campaign left the RNC with renewed determination to make updating Social Security a bigger part of the presidential debate.” He pledges to continue pushing for strengthening and expanding the nation’s Social Security program at next week’s Democratic National Convention in Philadelphia and until the November presidential elections.

To keep informed about Social Security discussion during this presidential campaign go to http://takeastand.aarp.org/,

Retirement Survey Bleak for Ocean State

Published in Pawtucket Times on February 1, 2016

Here we go again. This month, America’s tiniest state gets outed as being the most unfavorable state to live out your retirement years. According to a new WalletHub study, “2016’s Best & Worse States to Retire,” when compared to all 50 U.S. states and the District of Columbia, Rhode Island came in dead last when compared against 24 metrics falling in one of these three categories (Affordability, Quality of Life and Health Care).

WalletHub, an internet site that calls itself “a personal finance Web site, taps Florida as being the top state to live your retirement years, followed by Wyoming, South Dakota, South Carolina and Colorado. The in-depth analysis, geared to identifying the most retirement-friendly states, gives the Ocean States the distinct of being the worst place to live in your later years, followed by the District of Columbia, Hawaii, Connecticut and Vermont.

As to affordability, WalletHub looked at the adjusted cost of living, tax friendliness of a state, it’s taxation on pensions and Social Security income, and annual cost of in-home services. Rhode Island was ranked 51 (the worst) in affordability for retirees. In zeroing in on this specific variable, the state came in 41st in adjusted cost of living; 45th in annual cost of in-home services and 48th in taxpayer rankings.

For a state’s quality of life, WallettHub zeroed in on an array of variables including the number of theatres, museums, music venues, golf courses. The researchers also checked out crime rates, weather, the number people age 65 and older and whether the state’s labor is elderly friendly. A sampling of Rhode Island specific rankings for this variable include a ranking of 35th for Museums per Capita; 42nd for Theaters per Capita; and 48th for the number of golf courses per Capita; and 32nd in having employed residents age 65 and over.

As for health care, the study examined the number of family physicians, dentists, nurses, and health-care facilities per 100,000 residents, the ranking of the state’s public hospitals, the resident’s life expectancy and emotional health, even taking a look at the death rate for people age 65 and older. Rhode Island ranks 49th in number of family physicians per 100,000 Residents.

WallettHub analyst, Jill Gonzalez, says that for Rhode Island to become a mecca for retirees, state lawmakers must reconsider how they tax Social Security and pensions. The state’s current tax policy “is not at “all friendly toward retirees,” she adds.

According to Gonzalez, the state’s cost of living index is also high at 122 while the national index is 100. This means that if the cost of goods and services nationwide is $100, the Rhode Island retirees will pay $122. Annual costs to pay for home care are nearly $54,000 per year in Rhode Island and state policy makers must find a way to reduce this key community-based service.
Statewide Reactions to Web site Survey

These surveys aggregate data that does not encourage retirement here,” observes AARP Rhode Island State Director Kathleen Connell. “They do not fully measure quality of life or how the proximity to Boston and New York City make Rhode Island attractive to many retirees. But you often hear people talk about retiring in states where lower taxes and deflated housings prices suggest that retirement income will go dramatically farther.

“The tax issue is a reality driven by the state’s so-called ‘structural deficits’ that have resulted in cities and towns raising property and excise taxes. Meanwhile, hikes in fees and new surcharges have added to the tax burden. Legislative leaders face a great challenge in reversing this trend.

“Many people in their 40s and 50s who want to retire in Rhode Island can save more wisely for retirement and find a way to make it work. Anyone entering retirement now with little savings and expecting to rely primarily on Social Security is faced with difficult decisions.

“So, clearly the survey means different things to different people. Few would disagree that Rhode Island is a great place to retire – maybe one of the best places in the nation. If you can afford it.”

Edward Mazze, Distinguished University Professor of Business Administration, says, “I cannot disagree with the quantitative findings in the study. Behind the numbers are two critical factors that have an impact on retiring in Rhode Island – first, the Rhode Island economy has barely grown in the last eight years – second, the negative reputation of the state with government leaders going to jail, high property taxes, poor school systems and unfunded public pension and health programs.”

Mazze calls on the Rhode Island General Assembly to raise the state estate tax level to the same level as the federal estate tax level and exempt social security benefits from state taxes no matter what the income level. “The legislature has to reduce sales taxes and fees, be more transparent in its operations so that individuals trust government actions and fund the social services that retirees need,” he says.

But even with these negative findings retirees should Rhode Island as place to live because of its strategic location, transportation facilities and cultural and recreational activities. However, he acknowledges that “with the high cost of living in Rhode Island and fewer part-time job opportunities for retirees it is difficult to promote the state as a place to retire.”

Ernie Almonte, Rhode Island’s former auditor and partner at RSM US, LLP, a company that performs audit, tax and consulting services, says the changes in how the state taxes Social Security made by lawmakers last year was a good first step. But the former candidate for State Treasurer urges Governor Gina Raimondo and House and Senate Leadership to take a look at the state’s estate tax in the upcoming session. “I believe last year’s changes made by lawmakers was a move in the right direction but we cannot forget the legislative change to the estate cliff effect. “This certainly is a deciding factor for retirees looking to a place to settle down in their retirement years,” he adds.

Almonte also encourages state lawmakers to sit down with the Rhode Island Society of CPA’s to discuss tax policy. “Having a robust discussion on the role of tax policy to pay for necessary services and investments balanced by the ability to pay and the need to pay would be quite helpful to the long run,” he says.
House Speaker Nicholas Mattiello sees the business climate and economic outlook improving as he works to make the state’s tax structure more competitive with neighboring states. He says that the WallettHub survey did not take into account the repeal of state income tax for most Social Security recipients. The State offers retirees “a great quality of life with easy access to our beaches and we have excellent cultural attractions, restaurants, hospitals and universities, he says.

As she has said over her first year, Governor Gina Raimondo is “laser focused” on improving the quality of life for all Rhode Islanders, says deputy press secretary Katie O’Hanlon. “We’ve made a lot of progress over the past year, including eliminating state taxes on Social Security benefits for low and middle-income seniors and increasing funding for Meals on Wheels. However, we can always find ways to improve, says O’Hanlon.

It’s time for the Rhode Island General Assembly to get serious with enacting legislative proposals to attract retirees, more important to keep them from leaving for other retirement havens. Why not do a thorough review of tax policies of WalletHub’s best five places to retire and seek out best tax practices of other states? In the upcoming legislative session, Governor Raimondo and House and Senate leadership might consider reaching out to AARP Rhode Island and aging groups, along with the Rhode Island Society of CPAs, to organize a tax summit, seeking creative ways to tweak the state’s tax code to retain and attract retirees.

This WebHub study can be found at  http://www.wallethub.com/edu/best-and-worst-states-to-retire/18592/.

 

 

Quality of Life Amenities Make Providence a Great Retirement Mecca

Published in Woonsocket Call on August 30, 2015

Today’s retirement age is not set in stone at 65 years old for aging baby boomers, the milestone age where their parents and grandparents retired from the workforce.  Retirement Confidence Studies are finding that retiring in your mid-sixties is not a sure bet for many. According to WalletHub, a leading personal finance website, one such study, the Employee Benefit Research Institute’s 2014 Retirement Confidence Survey, found that  23 percent of workers expected to retire at age 65, but only 11 percent actually were able to.

The latest EBRI survey, released last April, said that many respondents blamed the nation’s poor economy for the continuing need to work in their later years. Others pointed to “inadequate finances” as another key reason for not retiring.  For 51 percent of workers and 31 percent of retirees, their accumulated debt kept them at their jobs.

WalletHub adds, the Report on the Economic Well-being of US Households in 2014 prepared by the Board of Governors of the Federal Reserve System, says that 24 percent of the survey respondents are not at all confident at having enough money to finance a comfortable retirement.  The government report also noted that 50 percent cited cost of living and daily expenses as obstacles for putting money into their retirement egg nest.

WalletHub calls for a strategy to slide into a more comfortable retirement for those whose nest egg is small, just relocate to a City to “stretch your dollar without sacrificing your lifestyle.”Sars by Relocation

WalletHub decided to pinpoint the most cost efficient and retirement-friendly places in the country because of the research studies indicating that feelings of financial insecurity have an impact on how retirees make decisions to save for retirement, says WalletHub Spokesperson, Jill Gonzalez.

For the second year in a row, WalletHub, conducted an in-depth analysis of the Best and Worst Cities to Retire.  Like last year, the financial website compared the affordability, quality of life, health care and availability of recreational activities in the 150 largest U.S. cities.  The compiled data included 24 metrics, ranging from the cost of living to public hospital rankings to the percentage of the population aged 65 and older.

“Our methodology makes the difference. It’s extremely well-researched and the metrics are developed in conjunction with academic experts that span several fields,” says Gonzalez.res

WalletHub’s 2015 Best and Worst Cities to Retire ranks Rhode Island’s Capitol City almost dead last as the worst place to retire. But, the City of Providence did place better than two of his cities, Jersey City and New Jersey.  

Some of the metrics compiled from this survey include: Adjusted Cost of Living (122); Annual Cost of In-Home Services (140); Elderly Friendly Labor Market (80); Number of Adult Volunteer Activities per Capita (23); Percent of the Population Aged 65 and Older (132); Emotional health (144); Violent Crime Rate (78); and number of Home Care Facilities per capita (129).

Gonzalez noted that like 2014, in this years’ survey WalletHub compared the retirement-friendliness of the 150 most populated largest U.S. Cities (excluding the surrounding metro areas) across four key dimensions: Affordability; Activities; Quality of Life; and health Care.  Twenty four relevant metrics were complied, ranging from the cost of living to the percentage of the elderly population to the availability of recreational activities.

“Every year we strive to improve our methodology by taking into account consumer feedback and industry trends,” adds Gonzalez.

It’s no surprise that when a financial web site publishes rankings, older industrial cities in the Northeast are at a disadvantage,” said AARP Rhode Island State Director Kathleen Connell.

“Some of the indicators where Providence comes up short are discouraging. However, many of the city’s greatest attributes – its arts and culture environment, community esources associated with world-class institutes of higher learning, proximity to Narragansett Bay and convenient travel distances to Boston and New York are but a few of the reasons people stay after retirement.

“There should be no confusing Providence with the state as a whole as a retirement choice. Granted, Rhode Island is more expensive than the sunbelt and in states where the housing market collapse has resulted in more affordable housing alternatives. And energy costs will always be higher in our region. That said, many downsizing retirees who value quality of life find a way to make it work. Others can’t, and we need to find ways to make retiring here more affordable. Eliminating the state tax on Social Security benefits was a step in the right direction, albeit in real dollars not a game changer for many retirees with limited resources. Affordable senior housing is a big issue and one of those challenges that requires urgent attention,” Connell added.

“The WalletHub analysis is useful insofar as it raises awareness and compels people to think more about retirement – and that includes both retirees as well as policymakers.”

“Although the WalletHub’s study is well conducted and well-respected in the financial sector, you have to look deeper into each of the categories when it comes to Providence,” says Edward M. Mazze, Distinguished University Professor of Business Administration, at the University of Rhode Island.  “There are some unique factors that make Providence a better place to retire than one would guess from the survey,” he adds.

Mazze explains that economists who list, through national surveys, the best retirement places generally emphasize three criteria, specifically the cost of living, income, property and sales taxes and state/inheritance taxes. “When considering only these criteria, Providence and most cities will not rank high,” he says.

According to Rhode Island’s widely acclaimed economist, the state has made significant improvements in changing the income tax rates, raising the bottom on estate taxes and removing some social security benefits from state taxes which makes Providence a “great place to retire from a quality of life standpoint.”

For those retirees who want to live in a city that has four seasons, is strategically located near other major cities like Boston and New York, and want an active life-style, Providence meets the criteria,” he says.

Providence’s downtown area is also a site of parades, festivals and celebrations, says Mazze, adding that after enjoying these activities, retirees can dine at world-class restaurants.  You might also add to your list the close access to over 100 beaches and 400 miles of coastline, bike and nature trails and historic sites.

While WalletHub’s survey may not show Providence as a top place to retire, the quality of life factors would ratchet up Providence into a higher rating.