Social Security raise welcomed in tough economy

By Matt Sedensky

Associated Press

Published: Friday, Oct. 21 2011 10:16 p.m. MDT

Cancer survivors Richard and Carol Birch stand on their front porch in Geneva, Ill. Thursday, Oct. 20, 2011. The Birches have lived in their home for forty years, have driven the same car for nearly twenty-five years, and never lived above their wage. Medicare is a drain on their finances and they say the new Social Security raise won't help much.

Associated Press

WEST PALM BEACH, Fla. — For some, the just-announced increase in Social Security checks amounts to an extra meal out, a little more cash for clothes or a new pair of shoes, some added comfort in retirement. For Elizabeth Davis, it's a crucial boost to the only thing keeping her afloat.

The 71-year-old Miami woman grew up picking cotton on her family's South Carolina farm, raised four children and has worked all her life, even now at a preschool. She is divorced, and her small 401k account "went down the drain," she said. So she counts the days to the third Wednesday of each month, when her $668 Social Security check arrives, and she is able to pay her bills.

"I could live a little better," she said of the 3.6 percent raise announced this week, the first in two years. "I don't have anything to look forward to until that check every month."

The reaction the cost-of-living adjustment has garnered illuminates the divide between the rich and poor among America's oldest residents. Social Security represents a staggering share of income for lower- and middle-class seniors — made evident just this week in a new government report — and for whom any increase can make a world of difference. For upper-income seniors, it's simply a nice plus.

Starting in January, 55 million Social Security recipients will get increases averaging $39 a month, or about $467 a year. In December, more than 8 million people who receive Supplemental Security Income, the disability program for the poor, will get increases averaging $18 a month, or about $216 a year.

Davis felt the effects of no raise the past two years. Her only other income is a small stipend for her work that averages about $232 a month. She's been using her credit card more and building debt. She's already trimmed as much as she can — from cutting her cable plan to limiting her phone usage to keeping the air conditioning off. She owns her home, but taxes, insurance, utilities and groceries eat up nearly all her income. As those costs rise, there was no wiggle room.

In Seattle, Joseph C. Visintainer, 63, lives alone with his cat in a U.S. Department of Housing and Urban Development complex, where rent is kept affordable. The retired restaurant worker said he keeps his expenses low in part by taking the bus instead of driving, and eating TV dinners instead of buying meat. Visintainer lives off Social Security and keeps some investments just for emergencies.

"I have to watch what I spend. I don't go out a lot like I used to," he said. "If I get an increase, I'll say thank you."

For John Bowker, 81, a retired executive, it's simply a little something extra. He and his wife, Linda, a retired computer programmer, live in the sprawling southwest Florida retirement community of Sun City Center, largely off their savings and investments. But a raise in Social Security adds some padding.

"We can do a little more on our weekends," Bowker said. "We'll feel a little less squeamish about going out and spending 40 or 50 bucks a month for a meal."

For many of the Bowkers' neighbors, though, it's different. He said some have even had trouble coming up with the modest $256-a-year dues residents of Sun City Center must pay on top of their mortgage or rent. Across the income spectrum, though, he said he hears wide acknowledgement from his neighbors that seniors are better off with Social Security.

"Even for us rock-red Republicans," he said, "this is one of the government programs that we would hurt very badly if it were not available to us."

The government formally announced the raise Wednesday, two days after the Government Accountability Office put out a report on income security among seniors that shed light on just how crucial Social Security payouts are.

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