Bear Market News for Seniors

Un-Happy Holidays for Seniors and the Disabled

2011-12-20T14:39:00.000-08:00

Published on Tuesday, December 20, 2011 by CommonDreams.org

Un-Happy Holidays for Seniors and the Disabled – Here’s Your Donut

It isn’t sugar plums dancing in their dreams for America’s seniors and disabled who are covered by the Medicare program. It’s donuts. Donut holes into which many fall at this time of the year as they reach the maximum limits of the first tier of “Part D” prescription drug benefits.

I watched my 67-year-old husband trudge up the driveway on a recent morning as I pulled away. He had just showed me the printout of his drug costs for the year. He’s reached the Medicare Part D donut hole by using more than $3,000 in prescription benefits. He is disheartened because his costs tripled at just the time of the year when grandfathers like to be thinking about other things instead of how to manage the cost of their prescriptions or which drugs can be cut in half and still do some good to get through to January 1 and a new benefit year.

And it’s not as if those drugs had negotiated prices that would make it a fair playing field for Medicare beneficiaries. No, no. When Part D was put into place, Congress didn’t see fit to allow the Medicare program to negotiate for lower drug prices. You might think $3,000 sounds like a lot in medication costs, and it is until you fully understand that the prices are inflated as far as possible without any negotiated rates.

So it was a donut hole for the sick and the elderly. Reach it and you are on your own to pay for all of your drug costs until you reach the other side of the hole – or die because you could not afford to pay for those medications.

My husband’s $300 a month supplemental plan doesn’t help much or at all on most of the donut hole costs, so before folks judge him and millions of others as irresponsible and think they should be prepared for the costs, think again. Many pay40 percent or more of their retirement income out in healthcare costs even after buying plans marketed to keep them protected. Corporate America is making sure seniors and the disabled who rely on Medicare spend as much of their plan benefits and retirement funds on their profits. Not much “Ho, Ho, Ho, Merry Christmas” in that.

My 84-year-old mother called me last weekend worried about the beginning of 2012. She’s also on Medicare and a supplemental plan. She reached her donut hole last week too. But her bigger worry is the New Year when she’ll have to meet the drug and supplemental plan deductibles she has though her fixed income will not be changing. “How will I get my puffers?” She explained that one is as much as $400 when she pays out-of-pocket. She worries about paying her rent and buying her groceries during those weeks until she has paid for the medications, submitted her claims for reimbursement from the supplemental plan and finally gets a partial check for coverage. She worries.

My income is the back-up plan for both of them. Without me, my husband says, he’d be dead. My mom never knows if I’ll have enough to send her enough once I help pay my husband’s costs.

It is hard to imagine the kind of selfishness that allows our elders to worry so after decades of hard work and decades of paying taxes. It’s not as if my mother didn’t earn her keep all these years. She worked through World War II when times were tough for her family, and then in 1954, she contracted polio. She was very ill for some time and even spent time in an iron lung trying to survive and heal. She worked outside our home the whole time I was growing up, so she paid into Social Security for many years. My dad too. He also had a pension plan through his employer (ironically he worked as a pharmaceutical salesman), and he set up all that he could to keep my mom safe after he died. They did all they could do to plan for their retirement years.

But as my mom struggles to get her medications and worries about co-pays and deductibles, rent, utilities and food, the company my dad worked for has morphed through several huge buy-outs and legal entanglements (the IUD deaths in the 70s, phen-phen diet pill deaths in the 80s, and beyond). The company had to find a way to survive and keep profiting, so they cut pensions for retirees and survivors, they cut benefits, and they sold out the dead who helped build their empire of greed.

My mom’s worries this holiday season are not shared by the CEOs of the drug companies profiting off Medicare Part D and the donut hole. It is yet another example among many of why our system is so corrupt – profit rules over people. It breaks my heart and makes me mad.

I’d write shame-shame, but I’d say they’re a little beyond shame, wouldn’t you? Someday when we finally reach the point where a progressively financed, single standard of high quality care is guaranteed for all, we won’t leave our seniors and the disabled worried and upset for the holidays. Perhaps we’ll decide to honor them a bit more than what we have so far.

In the meantime, this holiday season if you know someone who relies on some combination of Medicare and supplemental benefits to help with their medical costs, ask if they need some help. Because many of them cannot join up out at “Occupy” sites and weigh in that way (though I’ll bet many would if they could) and because the people they elected to protect them aren’t too interested in this issue right now as they rush to get home for the holidays. Seniors and the disabled who have slipped into the donut hole aren’t on the radar this year – at least not until it’s turn-out-the-vote time.

Donna Smith is a community organizer for National Nurses United (the new national arm of the California Nurses Association) and National Co-Chair for the Progressive Democrats of America Healthcare Not Warfare campaign.

Alzheimer's disease: Best bets to hold off the disease

2011-03-26T07:44:00.000-07:00

AARP

Alzheimer's disease: Best bets to hold off the disease

from: Los Angeles Times |

By Shari Roan

The audience wasn't happy. Its members, Jul. 30, 2010 (McClatchy-Tribune News Service delivered by Newstex) -- private citizens, healthcare professionals and advocates for the elderly _ had gathered to hear a report on how to prevent Alzheimer's; instead, they were told that, in fact, nothing has been proved to keep the disease at bay.

"We're not trying to take anyone's hope away," said report co-author Dr. Carl C. Bell, a professor of psychiatry and public health at the University of Illinois, Chicago, who noted the dejection in the air that day. "But we have to go with the hard science."

The bleak assessment was issued by a National Institutes of Health task force at an April meeting in Bethesda, Md. It was a State of the Science summary of more than 250 studies on potential ways to lower risk of the disease _ and it was entirely accurate: None of the data had been strong enough for experts to definitively say "Do this" or "Don't do that."

But that's not to say the prevention picture is without hope. Several healthy and inexpensive strategies are clearly worth trying, say neurologists and Alzheimer's researchers.

"There is an emerging body of evidence on what you can do to reduce your risk," said Debra Cherry, executive vice president of the California Southland Chapter of the Alzheimer's Association. "It's not at the levels of research from randomized, controlled trials, but it suggests things are moving in the right direction. We are learning how to reduce risk."

The strategies with the most support are regular physical activity, a Mediterranean diet and high levels of cognitive engagement.

There would appear to be little to lose. Among people 55 and older, 1 in 8 will develop Alzheimer's disease and 1 in 6 will develop some type of dementia.

Physical activity: Perhaps the best way to potentially cut the chance of developing Alzheimer's is to exercise _ regularly and with at least moderate intensity.

A large, long-term study presented earlier this month at the Alzheimer's Association International Conference on Alzheimer's Disease meeting in Honolulu found that people who perform moderate to heavy levels of exercise have a 40 percent lower risk of developing any type of dementia compared with people reporting the lowest level of exercise.

The study doesn't prove cause and effect, but it is noteworthy because of its size and the source of its data. The 1,200 participants, who had an average age of 76, were part of the long-running Framingham Study on cardiovascular health; their physical activity levels were recorded for at least a decade, along with the incidence of dementia.

Biological studies also support the idea that activity is good for the brain. In studies at the University of California Irvine, Dr. Carl Cotman has shown that exercise increases levels of a substance called brain-derived neurotrophic factor, which enhances brain function and promotes the survival of neurons.

"There is a lot of data from epidemiology studies and animal studies supporting physical activity," said Laurie Ryan, program director for Alzheimer's disease clinical trials at the National Institute on Aging. "Exercise really is promising."

But just any movement might not do. The data, she points out, suggest that moderate to heavier exercise is more beneficial than mild physical activity, such as stretching.

Diet: Numerous population-based studies suggest that people who eat a diet high in fruits, vegetables, nuts, red wine and omega-3 fatty acids _ and low in saturated fats _ have a reduced risk of dementia of any type.

"Dietary factors are important," Ryan said. "The Mediterranean diet seems more beneficial than the standard Western diet."

Omega-3 fatty acids, in particular, have been linked to a reduced risk of developing Alzheimer's. A 2005 Cochrane Review article stressed that research on omega-3s should be a priority. Because it can be hard to get enough of these nutrients from the diet _ they're found most plentifully in salmon and sardines _ some experts suggest taking a supplement of 1 or 2 grams a day.

Other dietary elements have also emerged as especially promising; among them are alcohol and tea.

Several studies have linked light to moderate alcohol intake with a reduced risk of dementia. One of the most solid pieces of research, published in the Lancet in 2002, followed more than 5,000 healthy people ages 55 and older for at least six years. That work, called the Rotterdam study, found that light-to-moderate drinkers had a 42 percent lower risk of dementia as compared with non-drinkers.

As for tea, a study presented at the recent International Conference on Alzheimer's Disease adds to the growing body of research suggesting its benefits. It found that, over time, tea drinkers have rates of cognitive decline 17 percent to 37 percent lower than non-tea drinkers.

The study's author, Lenore Arab, a professor of medicine at UCLA, examined data on 4,800 men and women 65 and older, recording their coffee and tea consumption and following them for up to 14 years. People who drank tea one to four times a week had the greatest reduced risk. Coffee intake was not linked to lower risk except among people who had the highest rate of consumption.

The reason why tea may have benefits is likely related to plant-based chemicals, not caffeine, Arab said.

Other nutritional gambits have proved spectacularly unimpressive. In particular, the once highly touted gingko biloba has not been found to reduce risk of dementia or Alzheimer's disease or, in fact, to improve cognitive performance in general. And there is little evidence that vitamin B, vitamin C, folate and beta-carotene are helpful in supplement form, as early studies had suggested.

"It could be that giving supplements is not the best way to do this," Ryan said. "It may be more important to get the nutrient in the diet."

The NIH's State of the Science panel appeared to take a dim view of supplements because of the potential for consumers to waste money.

"There is a cost to supplements," noted Dinesh Patel, a panel member and geriatrician at George Washington University School of Medicine. "For some of them, we don't even know the side effects or possible harms."

Cognitive engagement: Some studies suggest that living with someone is protective _ and there is strong evidence that the loss of a spouse leads to decline. Further, staying mentally engaged also seems to be beneficial.

One of the best-known studies on this second connection is the work by Dr. David Bennett, a professor of neurological sciences at Rush University Medical Center in Chicago. His research, called the Religious Orders Study, found that people who spent the most time engaged in mentally stimulating activities _ such as reading, playing cards or doing puzzles, going to the museum _ had a 47 percent reduced risk of developing dementia compared with those with the lowest rates of cognitive activity.

But studies that provide people with "brain games" and other tools to keep their minds busy and challenged have produced inconsistent findings. Such programs aim to improve memory training, reasoning and speed of thinking, and some studies show small effects over a five-year period. But no long-term data can attest to their effectiveness.

When to start: The timing of preventive strategies may prove crucial, with the notion of "the earlier, the better" seeming to hold true.

Research has suggested that highly educated people have a larger "cognitive reserve," and a study of more than 6,000 people published last year in the journal Neurology found that higher educational attainment appears to be linked to higher cognitive function. Once dementia sets in, however, level of education seems to have no bearing on how fast the dementia progresses.

Similarly, it may be wise to adopt a healthful diet and exercise regimen as soon as possible. "These lifestyle factors may have to occur early in life," Ryan said.

That doesn't mean that older people can't decrease their risk. Research strongly implies that diseases that develop later _ such as heart disease, diabetes, hypertension and obesity _ raise the possibility of dementia. Researchers are now exploring whether medications used to treat these conditions may also reduce Alzheimer's disease risk.

Some critics of the State of the Science report note that it may be difficult to ever prove whether some prevention strategies work; it would be unethical, for example, to assess the effect of hypertension on Alzheimer's by not treating some people.

Ultimately, the most reasonable approach would seem to boil down to this: Eat healthfully, exercise, maintain a pleasant social life and rigorously treat conditions like hypertension, high cholesterol, heart disease, obesity and diabetes.

"It will not hurt any of us to follow those suggestions," Cherry said. "To me, that's very optimistic."

___

AVAILABLE MEDICINES

Five medications have been approved to treat the cognitive symptoms of Alzheimer's disease. The drugs can reduce some symptoms _ such as difficulties with memory, language, attention and reasoning _ especially in the early stages of the disease. They can, accordingly, improve quality of life, but they don't work for everyone, and none of them works permanently. Eventually the disease will overtake the drugs' ability to compensate.

Four of the medications are cholinesterase inhibitors. These drugs appear to work by slowing the loss of acetylcholine in the brain, a chemical critical to cognitive function. The other, and newest drug, Namenda, is an N-methyl D-aspartate antagonist. It appears to work by regulating glutamate, a brain chemical that can cause cell death in excessive amounts.

A cholinesterase inhibitor and the NMDA antagonist are often prescribed together. In combination, or even taken alone, these medications can, in some people, improve the ability to perform simple tasks.

Namenda

Generic name: memantine

Approved: 2003

Used: In later stages

Razadyne or Reminyl

Generic name: galantamine

Approved: 2001

Used: Earlier stages

Exelon

Generic name: rivastigmine

Approved: 2000

Used: Earlier stages

Aricept

Generic name: donepezil

Approved: 1996

Use: Earlier stages

Cognex

Generic name: tacrine

Approved: 1993

Used: Rarely used due to serious side effects

___

WHERE TO TURN FOR SOME HELP

For basic information on Alzheimer's disease, including the latest research developments, go to the website of the National Institute on Aging.

For caregiving advice and guidance, contact the National Alliance for Caregiving.

For information and news on the disease, contact the national Alzheimer's Assn., which also showcases the latest in Alzheimer's research and science.

To participate in a new Alzheimer's Assn. program that matches people with the disease (and related dementias) to clinical trials for which they may be eligible, go the website or call (800) 272-3900. The service is free and confidential.

___

Newstex ID: KRTN-1429-47473338

New Test Could Help Detect Alzheimer’s Disease

2011-03-26T07:31:00.000-07:00

AARP

Bulletin

New Test Could Help Detect Alzheimer’s Disease

Who should get it?

by: Katharine Greider | from: AARP Bulletin |

En español | At an international conference on Alzheimer's disease in Honolulu yesterday, a small Philadelphia-based company presented data on a radioactive dye that promises to be a powerful new tool for penetrating the mysteries of the disease.

Used in conjunction with a PET scan, the radioactive "tracer" is injected into patients, where it quickly binds to sticky plaques in the brain that have long been considered a hallmark of Alzheimer's disease.

The plaques appear brighter on the scan-an image of changes in the living brain once observable only under a microscope at autopsy.

Results presented by the PET tracer's maker, Avid Radiopharmaceuticals, demonstrated at least a 97 percent agreement between the labeled brain scans and pathology examination at autopsy in the diagnosis of Alzheimer's, according to Michael Weiner, M.D., director of the Center for Imaging of Neurodegenerative Diseases at the San Francisco VA Medical Center, who attended the talk.

In a companion study examining the brains of young people not expected to have Alzheimer's, none had a positive scan. "Overall the results are very good," says Weiner, who also is principal investigator of a major government-industry research initiative to determine the best methods for observing Alzheimer's in clinical trials. "The results confirm the view that scanning with an amyloid PET scanning agent is going to detect amyloid in the brain."

Being able to "see" the plaques, made up of a sticky protein fragment called beta-amyloid, gives researchers a new window into the disease process and helps them track the effects of experimental Alzheimer's drugs on the brain.

If the new tracer is approved for marketing by the U.S. Food and Drug Administration-Avid, expects to apply within months-it also will be available to doctors around the country. There's little doubt that Avid's tracer, and perhaps similar ones in development, are a boon to Alzheimer's research. But it will take some time before doctors know what role the scan can play in answering the more immediate questions from patients worried about memory loss or other symptoms of mental decline.

What the test tells us

"We don't exactly know what the clinical use of these scans will be," says Weiner. "We don't know their predictive value."

Indeed, perhaps the most pressing research question the scans can help to answer is the precise role of the amyloid plaques themselves. They are always present in the brains of people with Alzheimer's. But do they cause the dementia and other problems connected to the disease? Some researchers are convinced the culprit is a different kind of amyloid-floating clumps-rather than hardened plaques.

It's not clear, for example, that a 75-year-old person with emerging memory problems and a positive scan showing amyloid will go on to become severely demented; more than 30 percent of older people with normal mental functions show amyloid in the brain.

But doctors might use the new test to help confirm or rule out a diagnosis of Alzheimer's in patients exhibiting some symptoms of dementia.

A negative scan, says Weiner, could be reassuring. "Let's say I have a person that's having quite a bit of memory problems, but the scan is negative. Well, that's good news. That's very good news. They are very unlikely to show a rapid deterioration from Alzheimer's."

The new tracer scans "should not be used in everybody," says James E. Galvin, M.D., director of the Pearl Barlow Center for Memory Evaluation and Treatment at New York University's Langone Medical Center. He says if the patient has symptoms consistent with Alzheimer's and the doctor is confident of the diagnosis, the scan would add little information.

Its utility, he believes, will be in helping to resolve "diagnostic dilemmas" where symptoms and other findings leave significant room for doubt. And in tracking the effects of experimental drugs.

One more tool to help with a cure

Finding Alzheimer’s early is critical both to discovering treatments that attack the disease—currently there are none—and not just its symptoms. Researchers believe the damage in the brain begins a decade or more before an individual notices symptoms. Indeed, it may be that many experimental drugs have failed to arrest or even slow Alzheimer’s because they came too late; dead brain cells don’t come back to life.

The new amyloid tracer (florbetapir F18) represents only one of several recent advances in techniques for observing Alzheimer’s disease in the brain, says Maria C. Carrillo, senior director for medical and scientific relations for the Alzheimer’s Association, host of the conference in Honolulu. “What’s exciting about our current state of knowledge,” she says, “is that we now understand that early detection is possible. That gives us so much hope.”

Other tests that measure signs of Alzheimer’s—from key proteins in spinal fluid to other kinds of imaging—seem to offer a telling glimpse into the disease at different points along its destructive path through the brain. Each may prove a useful source of information at different stages of Alzheimer’s.

The new tracer builds on scientific pioneering by University of Pittsburgh researchers who developed an agent that helped spotlight plaque in the brain. But their compound has a very short life and can only be used by high-tech research centers. Use by doctors in hospitals and clinics is out of the question.

Avid’s new tracer, on the other hand, lasts long enough to allow its transport from manufacturing sites to scanning clinics, potentially reaching about 90 percent of the country, says company spokesperson Christopher Bunting.

Will it be covered by insurance?

For these new brain scans to enter widespread use, both experts and insurers will need to be convinced that they provide some clear benefit—making it easier for patients to get treatment, for example.

Currently the standard evaluation for possible Alzheimer’s disease includes some type of brain imaging—a CT (computed tomography) or MRI—mostly to rule out other problems such as a stroke or tumor.

The more specialized PET test is used far less often, and is covered by Medicare only for the specific purpose of distinguishing Alzheimer’s from a relatively rare condition called fronto-temporal dementia, which typically produces quite different findings on the scan.

This new test should provide a clear benefit “in terms of accuracy of diagnosis,” says P. Murali Doraiswamy, M.D., a professor of psychiatry and geriatrics at Duke University Medical Center who was involved in Avid’s study of the new tracer. He believes it will prove a “game changer” when it comes to diagnosing the disease and getting patients started on treatments earlier.

Longer life, better studies

A study published last year by researchers at Washington University in St. Louis used the earlier Pittsburgh tracer on a small group of patients and found that mentally normal older adults with a positive amyloid scan were more likely than those without amyloid plaques to develop symptoms of Alzheimer’s.

The finding suggests the plaques are not benign, but it needs to be replicated in larger study groups, says Anne Fagan, a neuroscientist at Washington University and coauthor of this and other key work on the disease. Longer-lasting tracers than the Pittsburgh agent—like Avid’s new agent—could make those studies possible.

Katharine Greider lives in New York and writes about health and medicine.

Who Wants to Know?

Top images are from the brain of a cognitively normal person. The bottom images are from an Alzheimer’s patient; plaque buildup shows up in red. — Martin Palm/Gallery Stock

Many older people who suffer from memory lapses are in no hurry to seek a diagnostic work-up for Alzheimer’s disease. What’s the benefit, they wonder, when the condition is not only terrible in its effects, but inexorably progressive and incurable?

Alzheimer’s experts are working hard to change this perception. “We want people to run toward a diagnosis rather than away from it,” says Eric Tangalos, M.D., codirector of education at the Alzheimer’s Disease Research Center of the Mayo Clinic. A diagnosis, these doctors argue, allows the patient to:

participate in planning his or her own future, including family, financial and legal planning.
take one of a handful of medications to treat the cognitive symptoms of Alzheimer’s. The drugs’ benefits are moderate and transient, but they seem to work best in the early stages of the disease.
join programs and pursue activities that use and reinforce retained abilities, while avoiding disruptive changes that can accelerate decline.
join a clinical trial. Patients in clinical research trials typically get a high quality of care. They may be assigned to receive either a harmless placebo or an experimental treatment. Either way their participation helps advance scientific understanding of the disease.

10 Best-Rated States for Retirement

2011-03-26T07:16:00.000-07:00

AARP

10 Best-Rated States for Retirement

A super-low crime rate and modest tax burden put New Hampshire at the top of Money-Rates.com's list.

by: Mike DeSenne | September 22, 2010

— Jose Azel/Aurora

Many highly personal factors come into play when it's time to pick the perfect place to retire. Everything from availability of tee times to proximity to grandkids can have an impact on your decision. There's no one-size-fits-all formula. After all, one retiree's paradise can be another's hellish nightmare.

Money-Rates.com is trying to add some objectivity to what's otherwise a very individualized life choice. The finance website looked at a number of factors to come up with a list of the 10 best states for retirement. The criteria include climate, crime rate, life expectancy and economic conditions such as cost of living, job opportunities and taxes.

The No. 1 state on the list might come as a surprise to many considering that it's a long way away from the Sun Belt. Despite its climate challenges, New Hampshire is the best-rated state to retire to because of its super-low crime rate, modest living costs and reasonable tax burden. Hawaii came in second, thanks to gorgeous weather and long life expectancy, followed by South Dakota, which is both safe and affordable.

Here are all 10 best states for retirement according to Money-Rates.com:

1. New Hampshire
2. Hawaii
3. South Dakota
4. North Dakota
5. Iowa
6. Virginia
7. Utah
8. Connecticut
9. Vermont
10. Idaho

Wondering which states to avoid? Check out the 10 worst states for retirement.

Worst States for Retirees

2011-03-26T07:06:00.000-07:00

AARP

Toughest States for Retirees

Poor fiscal health lands Illinois at the bottom of TopRetirements.com's list.

En español | Choosing where to live after retirement is a huge decision — and a very personal one. A low cost of living is a priority for some, while being close to family takes precedence for others regardless of the cost. As you plan for retirement, one smart way to identify the best place to retire for you is to eliminate the places that don't meet your needs.

Toward that end, TopRetirements.com, a website that provides information on retirement communities, has issued its list of the 10 worst states for retirement. The list is subjective, of course, but it's a good starting point for research. Factor in your personal retirement preferences as your review the rationale for why each of these states landed in the bottom 10.

Illinois retirees face frigid winters.
— Nam Y. Huh/AP

In compiling its list, TopRetirements.com gave the most weight to three criteria: taxes, fiscal health and climate. Each of these factors is important, generally speaking, to retirees. On the financial front, high taxes can eat away at limited incomes, while poor fiscal health can force state governments to raise revenue or cut services. A warm climate is a natural draw for many retirees. If those three criteria aren't among your top priorities, then the low rankings might not influence your decision.

Here are the 10 worst states for retirement, with No. 1 being the lowest ranked, according to TopRetirements.com:

Worst States for Retirement	Why You Should Think Twice
1) Illinois	Poor fiscal health
2) California	Expensive, and its finances are in disarray
3) New York	Very high taxes, including property taxes
4) Rhode Island	Worst-off state in the Northeast from a financial viewpoint; high taxes
5) New Jersey	Highest property taxes in the United States; has pension funding issues
6) Ohio	High unemployment and cold winters
7) Wisconsin	High property taxes and frigid weather
8) Massachusetts	High cost of living and high property taxes
9) Connecticut	Taxes Social Security and has high property taxes
10) Nevada	Foreclosure capital of the world

Visit TopRetirements.com for more details on why it ranked each state as low as it did. The information can be illuminating. Illinois, for example, is under such dire financial stress that it was forced to borrow money to fund its pension obligations. The state, however, doesn't tax retirees' Social Security income, which is a plus. The cold winters are inescapable.

You can also compare TopRetirements.com's choices to a similar list of the 10 worst-rated states for retirement that was compiled by Money-Rates.com, a finance website. Illinois didn't even make Money-Rates.com's list, which was topped instead by Nevada. Money-Rates.com gave significant weight to crime and unemployment rates.

Money-Rates.com also issued a list of the 10 best states for retirement.

Use this checklist to factor in personal retirement preference.>>

Use this checklist from TopRetirements.com as you evaluate potential retirement states. Give the most attention to the factors that you think will matter most to you in retirement:

Taxes (sales, income, property, inheritance and estate)
Climate and topography
Crime
Fiscal health of the state government
Recreation
Transportation
Health care
Cost of living (including housing)
Education (including colleges)
Cultural resources
Natural disasters
Proximity to friends and family
Fitting in socially, politically and religiously

Shafting America's Seniors on their Social Security!

2011-02-19T13:37:00.000-08:00

February 19, 2011 at 12:21:11

Shafting America's Seniors on their Social Security!

By Eugene Elander (about the author)

opednews.com

Mahatma Gandhi, the founder of modern India who got the British rulers out through non-violent action, was fond of saying that: Any nation can be judged by the way it treats its animals and its prisoners. Gandhi might well have added one more group: that nation's elderly.

So it is deplorable that America violates Gandhi's rule when it comes to our own seniors, by first freezing their vital social security retirement benefits for two years in a row, 2009 and 2010, and now ignoring the resurgence of very significant inflation in the United States. My previous articles pointed out clearly and convincingly that the pretext for that unprecedented two-year social security freeze was totally invalid as regards the elderly, whose costs (such as fuel, housing, and medical care) have been rising much faster than the overall Consumer Price Index on which this atrocious benefit freeze was based.

Now, this sad plight of America's senior citizens is made much worse by the renewed inflation in such areas as food prices, which have risen by as much as twenty percent in recent months, as well as the ongoing climb of fuel costs to astronomical heights. Gas prices alone are predicted to rise to a range of four to seven dollars per gallon this year.

Certainly, the burgeoning Federal budget deficit and growing public debt are issues which urgently need to be addressed. There are significant reductions in both which can be made through ending, now, both of America's costly and fruitless wars; reducing other unnecessary so-called defense spending; rooting out fraud, waste, and inefficiency; and seeing to it that the rich and ultra-rich begin, at long last, to pay their fair share of the tax burden, as they used to in the mid-Twentieth Century. None of those measures calls for the further shafting of America's seniors, at present by failing to compensate for the renewed inflation, and in the future by misguided attempts to raise the retirement age.

As one of America's growing elderly population, I began work in New York City when I was twelve years old, and have continued for the next six decades, still working well into my seventies. I'm not complaining, nor do most seniors; we continue to do more than our share to build and improve this nation so that future generations will find it even better than we did. All we ask in return is that the promise of a decent retirement income, dependent in large part on our social security benefits, be kept. That promise began under President Franklin Delano Roosevelt and has been a sacred trust for nearly seventy years-a trust still to be honored today!

Author's Biography Eugene Elander has been a progressive social and political activist for decades. As an author, he won the Young Poets Award at 16 from the Dayton Poets Guild for his poem, The Vision. He was chosen Poet Laureate of Pownal, (more...)

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.

Social Security: The Phony Crisis

2010-02-11T23:06:00.000-08:00

Action Alert: USA Today's One-Sided Social Security Report Countered Here

02/09/2010 by Jim Naureckas

FAIR put out an Action Alert today (2/9/10) on a USA Today report that presented dubious, one-sided claims about Social Security's supposed crisis. Here's our response:

“Dean Baker and Mark Weisbrot have no trouble at all demonstrating that even on highly conservative assumptions about economic growth, the much-forecast insolvency of the Social Security system by about 2030 is most unlikely to happen then, if indeed ever.”—The Economist

“The authors challenge basic assumptions with vigor and intelligence.…An absolutely relevant and important analysis, presented with force and clarity, that asks, basically, what kind of a nation we really are.”—Kirkus Reviews

Read an opinion piece by Mark Weisbrot and Dean Baker originally published in the Washington Post.

Dean Baker and Mark Weisbrot are co-directors of the Center for Economic and Policy Research.

What Crisis?

It Ain't Broke, So No Need To Fix It

An op-ed by Mark Weisbrot and Dean Baker

The latest Social Security trustees' report, whose numbers even the White House uses, predicts that the Social Security program can pay all promised benefits for the next 38 years—with no changes at all. The June 2004 estimate from the nonpartisan Congressional Budget Office projects that Social Security can pay all promised benefits without changes for even longer, until 2052. That's nearly half a century.

And we are supposed to be worried about this? It brings to mind the image of Woody Allen as a nerdy young child in Annie Hall, becoming suddenly depressed because he has discovered that "the universe is expanding" and life on Earth is ultimately doomed. Granted, 38 years is not an eternity. But even after 2042, the Social Security trustees say they will be able to pay an average benefit that is actually higher than what workers receive today—indefinitely. That's in 2004 dollars—adjusted for inflation.

Social Security benefits are programmed to rise not only with price inflation, but also with wages. So Congress will at some point have to increase taxes or shave the benefits promised to future generations. But that's no different from what's been done before. In fact the projected shortfall for the next 75 years is smaller than shortfalls covered by adjustments in each of the following decades: the 1950s, '60s, '70s, and '80s. It is also about one-third the size of the tax cuts enacted during the Bush administration.

In other words, it's a non-issue. Or should be. Yet most Americans seem terribly confused about the basic facts. During the third presidential debate last fall, moderator Bob Schieffer of CBS told the candidates that Social Security was "running out of money." Neither candidate corrected him, and the press did not note the error.

Here are some of the obfuscations and accounting tricks—or misunderstandings—that have created false impressions about Social Security's finances:

The disappearing trust fund: Some people say that Social Security will run into trouble in 2018. But this is like saying that Bill Gates will be strapped if he works only part time. He will still have $40 billion in assets, enough to keep him living well for a long time.

Similarly, the Social Security trust fund will have more than $3.7 trillion in today's dollars in 2018. Combined with payroll tax revenues, that is enough to cover promised benefits until 2042, the trustees' report says.

"That money's all been spent." When anyone lends money to the federal government by buying a bond, the government spends it. But the government still pays interest and repays what it borrowed. That goes for the Social Security trust fund. Social Security has been running annual surpluses (now at more than $150 billion) since 1983. By law it must invest that surplus in U.S. Treasury obligations.

"But the trust fund is only holding I.O.U.'s—just pieces of paper!" Another canard: All bonds are I.O.U.'s. Those "pieces of paper" are backed by the full faith and credit of the U.S. government, which has never, ever defaulted on its bonds.

"The baby boomers' retirement will bankrupt Social Security." Far from it. The first boomers actually begin retiring in 2008. Most of them will be dead before Social Security faces any financial difficulties.

"There are currently 3.3 workers paying into Social Security for every beneficiary; by 2035, there will be only 2.1." True enough, but deceptive and not scary as it sounds. Productivity (output per hour) will grow substantially during the same period, so we won't need nearly as many working people to support a larger retired population.

"If nothing is done, Social Security and Medicare will eat up 90 percent of our federal budget by 2050." The trick here is throwing in Medicare, a separate program. The projected costs of Medicare are indeed out of control—a result of spiraling health care costs. This makes a strong case for health care reform, but that has nothing to do with Social Security.

The bottom line is that Social Security is more financially sound today than it has been throughout most of its 69-year history, according to Social Security trustees' numbers. If workers in 2050, who will be earning on average 68 percent more in real, inflation-adjusted dollars than they are today, have to pay 1 or 2 percent more of their income in taxes—as they have in the past—they won't be able to complain much. They will still enjoy higher living standards than we do today. And Social Security will provide much larger real annual benefits for longer retirements when their turn comes.

The impending crisis of Social Security is a myth. Without it, however, Bush's initiative to slash benefits and partially privatize the program wouldn't have a prayer.

The introduction to
Social Security
The Phony Crisis
Dean Baker and Mark Weisbrot

We have a chance, said President Clinton, to “fix the roof while the sun is still shining.” He was talking about dealing with Social Security immediately, while the economy is growing and the federal budget is balanced. The audience was a regional conference on Social Security, in Kansas City, Missouri, that the White House had helped bring together.

The roof analogy is illuminating, but we can make it more accurate. Imagine that it’s not going to rain for more than 30 years. And the rain, when it does arrive (and it might not), will be pretty light. And imagine that the average household will have a lot more income for roof repair by the time the rain approaches.

Now add this: most of the people who say they want to fix the roof actually want to knock holes in it.

This is the situation facing Social Security, and it is well known to those who have looked at the numbers. The program will take in enough revenue to keep all of its promises for over 30 years, without any changes at all. Thirty years is a long time—it’s hard to think of any other program that can claim to be secure for that long. Furthermore, the forecast of a shortfall in 2034 is based on the economy limping along at less than a 1.7 percent annual rate of growth—about half the rate of the previous three decades. If the economy were to grow at 1998’s rate, for example, the system would never run short of money.

But even if the dismal growth forecasts turn out to be true, and the program eventually runs a deficit, it’s not exactly the end of the world. For one thing, the Social Security system would be far from “broke.” While it would indeed be short of revenue to maintain promised benefits, it would still be able to pay retirees higher real benefits than they are receiving today. And the nation has managed obligations of this size in the past: the financing gap would be roughly equal to the amount by which we increased military spending between 1976 and 1986 (a period in which we were not, incidentally, at war).

The program has promised, and historically delivered, a benefit that rises with wages in the economy. In order to maintain this commitment, we may have to increase the system’s revenues at some point. Would this place an undue burden on the post-2034 labor force? Hardly. Even if we were to increase payroll taxes to cover the shortfall, the added cost would barely dent the average real wage in 2034, which will be over 30 percent higher than it is today. It takes a great deal of imagination to perceive this as some sort of highway robbery by tomorrow’s senior citizens against the youth of today.

The simple truth is that our economy is generating more than enough income to provide a rising standard of living for future generations while meeting our commitments to Social Security. That’s true even at the terribly slow rates of growth projected for the future.

The strength of the economy isn’t perhaps as obvious as it should be, mainly because the majority of employees haven’t been sharing in the gains from economic growth. For more than 20 years, most wage and salary earners have actually seen a real decline in their pay (Mishel, Bernstein, and Schmitt 1999). So when people hear that future generations will be able to meet Social Security’s obligations out of a much higher income, they don’t believe it.

To reclaim the majority’s share of the economic pie is the real “challenge and opportunity of the twenty-first century,” to paraphrase another of President Clinton’s favorite lines. Yet the question of income distribution has been removed from the political agenda. Instead we are told that we can no longer afford our not-so-generous social safety net for the elderly. It is one of the greatest triumphs in the history of public relations to have transformed this prolonged episode of class warfare into an intergenerational conflict.

Mark Twain once said that a lie can get halfway around the world before the truth even gets its shoes on, and it’s hard to find a more compelling example than the lie about Social Security’s finances. Despite the fact that none of the numbers cited here are a matter of dispute, the public has been overwhelmingly convinced that Social Security is in deep trouble. According to a February 1998 poll by Peter Hart Research, 60 percent of nonretired Americans expect Social Security to pay much lower benefits or no benefits at all when they retire. The proportion is even higher, at 72 percent, for people aged 18-34.

Ironically, the only real threat to Social Security comes not from any fiscal or demographic constraints but from the political assaults on the program by would-be “reformers.” If not for these attacks, the probability that Social Security “will not be there” when anyone who is alive today retires would be about the same as the odds that the U.S. government will not be there. The latter event is, of course, a possibility, but not enough of a likelihood that most people would plan their retirement around it.

Confusion over these issues is not confined to the general public: it has infiltrated the upper reaches of the economics profession as well. Lester Thurow is a former dean of MIT’s Sloan School of Management, arguably one of the nation’s best writers on economic topics. He is also to the left of most economists with regard to issues concerning the appropriate size and scope of government and its intervention in the economy. Yet in an essay in the New York Times Magazine, he argued that the nation’s growing elderly population constituted “a new…revolutionary class, one that is bringing down the social welfare state, destroying government finances, altering the distribution of purchasing power and threatening the investments that all societies need to make to have a successful future” (Thurow 1996).

Even Paul Krugman, one of the nation’s foremost economists and winner of the John Bates Clark award (for best economist under 40 years of age), fell victim to these popular notions of demographic determinism. In a favorable review of Peter G. Peterson’s latest book, Will America Grow Up Before It Grows Old?, he endorsed the volume’s thesis that major reform of the Social Security system was necessary to avoid an unresolvable budget crisis 20-30 years from now. “The budgetary effects of this demographic tidal wave are straightforward to compute, but so huge as to defy comprehension,” he wrote (Krugman 1996a). Krugman later admitted, though, that he “went overboard in supporting Pete Peterson’s position on entitlements and demographics…I broke my own rule that you should always check an argument both with a back-of-the-envelope calculation and by consulting with the real experts, no matter how plausible and reasonable its author sounds” (Krugman 1996b).

Both Krugman and Thurow fell for the “entitlements trick,” a device deployed with great success by advocacy groups like Peterson’s Concord Coalition. The idea is to lump Social Security and Medicare together as “entitlements for the elderly.” On the basis of the last 30 years of health care inflation, it is easy to project explosive growth in future Medicare spending. The federal budget deficit therefore also explodes, and the whole economy goes down the tubes.

But Social Security and Medicare are separate programs, funded by separate taxes. There is a connection in that Medicare’s Part A, which covers hospital insurance, was modeled after Social Security in the sense that it is a social insurance program for the elderly. Most people probably do not distinguish between the part of their payroll tax that goes to Social Security and the part that goes to Medicare. As a political matter, for example, a large increase in the payroll tax for one program would make people less willing to pay more for the other.

But the two programs are financed separately, and they face very different financial problems, with different causes. Although Social Security is not facing any serious financial difficulties, Medicare will run into serious trouble within the next decade if medical care inflation continues at its historic rates.

Because the fees paid by Medicare to health care providers are overwhelmingly determined in the private health care system, Medicare’s financial problems have been driven by decades of double-digit inflation in the private sector. The program could be abolished entirely, but that would not avert the economic disaster 35 years from now that emerges from a simple projection of past increases in health care spending into the future. In short, past rates of increase in health care spending are economically unsustainable, regardless of what happens to Medicare (see chapter 3). These projections make a good argument for health care reform, but they say little about “entitlements for the elderly,” and nothing at all about Social Security.

The generational warriors have shunted aside these basic facts, preferring instead to view Medicare’s real financing problems, like Social Security’s imagined problems, through a fantastic prism of demographic determinism. Peter Peterson conjures up frightening dystopian visions of “a nation of Floridas” (Peterson 1996), with hordes of gray-haired baby boomers jetting around the country on senior citizen travel discounts, laying waste to the potential savings of Generations X, Y, and Z. The media have been influenced by these warnings, and we are regularly informed, as in the New York Times, that “Social Security faces a crisis early next century when the 76 million in the baby boom generation start retiring and putting a strain on the system” (Mitchell 1998).

But the baby boomers begin retiring in 2008, and at that time Social Security will still be running an annual surplus of about $150 billion (in constant 1999 dollars) per year. In fact the last of the baby boomers will already be retired by the time the system suffers it projected shortfall, even assuming the slow growth described above, at the end of 2034. It may come as a surprise to many readers that the main reason for this projected shortfall in the second half of the 75-year planning period is not the retirement of the baby boom generation. Actuarially, the main reason is that people are living longer.

Another example of how the truth of these matters can be so easily turned upside down is the belief of millions of people that Social Security has actually contributed to the federal budget deficits and the national debt. In fact the opposite is true: the Social Security trust fund loans its annual surplus, now running at over $124 billion, to the federal government. The surplus, which has been accumulating since 1983, when the payroll tax was increased, will help finance the baby boomers’ retirement, which is why the program will not have any trouble meeting its obligations while the boomers are retiring.

So much for the “demographic time bomb” with which the system’s “reformers” have been threatening us. With a few selected facts dressed up as surprises—such as a rising elderly population or a declining ratio of workers to retirees—and an oversized dose of verbal and accounting trickery, opponents of Social Security have been able to create the impression that the program is demographically unsustainable. This impression is false, as would be any economic projections that failed to take into account the other side of the equation, namely, the growth of the economy (see chapter 1).

Even the financial problems of Medicare do not result, for the most part, from demographic changes. While it is true that older people, on average, require more health care than the young, overall health care spending, as a percentage of gross domestic product, does not necessarily have to increase with the average age of the population. In fact, among most developed countries there appears to be no correlation between health care spending and the percentage of the population that is over 65. As a percentage of our economy, we spend twice as much on health care as does Sweden, for example, yet 17.3 percent of Sweden’s population is over 65, a proportion we will not reach for another 25 years (see chapter 3).

Rather, the financial threat to Medicare arises as this relatively more efficient system—its administrative costs are less than one-fourth those of the private system—is subjected to increasing “marketization.” The number of senior citizens who get their Medicare coverage through health maintenance organizations (HMOs) more than tripled from 1992 to 1998 and has been growing at a rate of 25 percent per year. It doesn’t take a fiscal genius at an HMO to figure out how to profit in this market. With about 90 percent of senior citizens costing Medicare an average of only $1,200 each, and with the government paying HMOs up to $6,000 per person, depending on the region, managed-care providers have been able to profit enormously by selecting, as much as possible, the healthiest senior citizens and leaving the rest (the least healthy 10 percent cost about $37,000 each) in the hands of Medicare. It all works out quite nicely for the HMOs, who can point to rising costs for Medicare relative to the more “efficient” private sector. Never mind that the HMOs’ cost reductions are achieved not only through selection of healthier patients—wasting even more resources in the selection process—but also by cutting back on necessary medical procedures. The prejudice in favor of market-based solutions is so powerful that even the groundswell of consumer dissatisfaction has yet to force policymakers to reexamine it.

In the last few years, the spread of managed care has created the illusion of efficiency in the private sector by reducing private medical inflation to more manageable levels. It remains to be seen whether these lower levels of price increases can be sustained, particularly without further cuts in necessary medical services. In the meantime, the call for real health care reform has been muted, and the country has been moving in the opposite direction from where it needs to go. While HMOs soak Medicare for its profitable patients and services, cuts are proposed to bring the program closer to fiscal balance. And recent legislation has opened the door to further fragmentation of the risk pool by allocating $2.2 billion to create “medical savings accounts.” These would allow the healthiest among senior citizens to gamble that their health care expenses will be less than average and to keep some of the difference if they win.

Privatization fever has now spread to Social Security, fueled by the fasted run-up in stock prices in U.S. economic history. Advocates have crafted their appeal to the growing segment of the public that has at least some money invested in stocks, mostly in 401(k) retirement plans. This is still a minority of the population—about 41 percent of households at latest count. And ownership is highly concentrated: the typical stock-owning household has only about $14,000, with millions holding only a very small proportion of their assets in stocks. At the other end of the distribution, about 5 percent of households hold the majority of stocks.

Nonetheless, there had been rapid expansion in stock ownership, primarily through stock mutual funds, over the last decade. This growth has created a base of support for the idea that people could be better off if their Social Security payroll taxes were invested privately. According to various popular presentations of this idea, everyone could be a millionaire upon retirement.

And indeed they could, if stocks were to continue to double every three years. But there are limits to such speculative bubbles. The reality is that the very run-up stock values that has placed privatization on the political agenda makes even the relatively modest returns of previous decades less likely in future years. Furthermore, due partly to a slowing down of population growth and partly to a (largely unexplained) slowdown in the growth of productivity, the economy is not projected to grow as fast as it did previously. But neither the privatizers nor even the actuaries who made the projections for the recent Advisory Council on Social Security have taken these facts into account when projecting the rate of return for equities. This omission is strange, because it is only under the conditions of the very slow growth forecast that there is even a small projected shortfall in Social Security’s revenues. But if the economy is going to grow at less than half the rate of the past 75 years, as the Social Security trustees predict, then the return on equities cannot maintain its past performance.

Over the past 75 years, the stock market has averaged a real (after-inflation) annual return of 7 percent. This is a healthy rate, which would double an investor’s money about every 10 years. Privatizers argue that the extra risks of the market smooth out over a long period of time, making the market the best place for retirement savings. And they complain that employees whose savings are primarily diverted to Social Security are unfairly prevented from cashing in on these higher returns. During the stock market’s turbulence in 1997 and again in 1998, millions of small investors showed their faith in these arguments by buying during the dips and pushing the market back up. “I’m in it for the long haul” was a typical response by mutual fund owners to the market’s wild ride.

But it is precisely the long haul that one can actually say something about. In the short run, all kinds of speculative bubbles are possible. Psychological factors—most obviously, the expectation of either higher earnings in the future or simply higher stock prices—can drive the stock market to seemingly unlimited heights. But over a long period of time—certainly well within the enormously long 75-year planning horizon for the Social Security system—the price of stocks is limited by the earnings of their underlying assets. That is, stocks are ultimately valuable because the companies they represent earn profits. These profits either are distributed to shareholders in the form of dividends or, if reinvested in the company, form the basis for shareholders’ capital gains.

In the short run, there is no necessary relation between the price of stock shares and a company’s profits: investors will continue buying so long as they think the price will be higher next year. And it will be higher as long as enough people believe that it will. But this process has an upper limit, as the Japanese learned all to well in 1990. At that time the Nikkei index of Japanese stocks had reached 38,712; it now stands below 14,000.

No one can safely predict when the stock market will reach its upper limit—anyone with such forecasting acumen could get rich overnight. But there are certain things we can pretty much rule out when we look at a long enough period of time. For example, the price-to-earnings ratios of stocks in the United States are now at near-record levels of 33 to 1. If prices continue to rise faster than profits, this ratio could go higher still. But would investors still hold stocks if it reached 234 to 1? It strains the imagination that they would, yet these are in fact the consequences of assuming that the market will continue to provide a 7 percent return. As noted above, returns on stocks depend on profits, and the growth of profits is proportional to the growth of the economy. If the economy grows at half of its past rate, which is the assumption underlying the dire Social Security forecasts, then profits cannot grow as fast as they used to. And so, if we are to accept the projections of a 7 percent rate of return, we must also believe that the price of stocks will rise meteorically in relation to earnings. The arithmetic tells us that we would see a price-to-earnings ratio of 234 to 1 by 2055.

Undoubtedly the bubble would burst long before the price of stocks flew this far away from the earnings potential of the stocks’ underlying assets. So we can safely conclude that the forecast of the privatizers (and of the Advisory Council on Social Security) of a 7 percent real rate of return on equities is, for all practical purposes, impossible. It turns out that the rate of return that is compatible with their projected economic growth is about 3.5 percent. Then there are the quite substantial costs of administration and brokerage fees that the current system avoids but that a private system wouldn’t. Adding these in knocks the return to privatized accounts down another percentage point, to 2.5 percent (see chapter 5).

And this is still a very charitable evaluation of privatization. Its advocates would like to maintain the mandatory character of Social Security while channeling this money into private accounts. They could hardly choose otherwise. Most households have not taken advantage of existing tax breaks for private savings. According to the most recent data available, of the 70.5 million workers with annual incomes under $30,000 in 1993, only 5.4 percent put money into an individual retirement account. Forcing people to save and invest their money into privatized accounts raises a host of interesting but not easily resolvable problems. The government will be to certify certain mutual funds for participation in this system. It will have to protect against fraud and other forms of abuse. There will be a lot of political pressure to bail out funds that go bankrupt. And will the government prevent people from borrowing against their forced savings? How will it enforce the conversion of these savings into a stream of retirement income?

Even if all these problems could be resolved at reasonable expense, and without creating an enormous, hateful bureaucracy, the big question remains: what to do about all the people who have been promised Social Security payments over the next four decades? That’s how long it will take for the first cohort of private Social Security investors to be able to retire on the returns from their individual accounts. In the meantime, while investors’ money is going into these private accounts, the system cannot do much for the tens of millions of beneficiaries whose checks are due. That means a major tax increase, enough to guarantee a negative return for the first generations of privatized savers.

A number of other dubious arguments advanced in favor of privatization are addressed in chapter 5. These arguments have been put forward with increasing urgency as the privatizers struggle to achieve their goals before the public discovers that stock prices can go down as well as up.

Other “fixes” are on the table as well, all of which would cause enormous casualties among the elderly. For example, many people would like to raise the normal retirement age. The idea might seem reasonable enough at first glance, since average life expectancy is increasing each decade. But consider what it means in light of the vast discrepancies in life expectancy among demographic groups. A typical black male worker who is 39 years old today can expect about 2.3 years of full retirement benefits, compared with 8.4 years for his white counterpart. Do we really want to drastically worsen that ratio by taking a year or more away from each?

Differences in life expectancy along class lines—income, occupation, and education—are about as big as the disparity by race. Raising the retirement age is therefore one of the most regressive ways to cut Social Security spending. It is analogous, in the realm of tax policy, to a per capita income tax increase. In other words, one could make the argument that since per capita income is growing every year, why not just increase everyone’s tax bill by $1,000, regardless of his or her income or wealth? Such a proposal would never get serious consideration—it is much too regressive even for the advocates of a “flat tax” and similar schemes—yet this is essentially what we do through the Social Security system when we raise the retirement age along a population in which there is such a great disparity of retirement years.

Other proposed fixes are similarly regressive, and unjustifiable on economic grounds, yet they seem to get serious attention. One of the more prominent of these (discussed in chapter 4) is the proposal to cut the Social Security cost-of-living adjustment (COLA), under the assumption that the consumer price index (CPI), on which COLAs are based, overstates the true rate of inflation (see Baker 1997). A panel of economists was appointed by the Senate in 1995 for the purpose of determining how much the CPI overstates inflation. The Boskin Commission, chaired by President Bush’s former chief economist, Michael Boskin, decided that the CPI was off by 1.1 percentage points. This meant, or at least it was hoped, that Social Security’s COLA could be cut by that amount. That may not sound like a lot, but if this conclusion had been adopted in 1998, the average beneficiary would have lost about $1,500 over the following five years.

Since America’s poorest seniors rely the most heavily on Social Security, such changes would cause a significant increase in poverty among the elderly. If this change had been made 10 years ago, there would be at least 600,000 more senior citizens in poverty now than there are currently (Weisbrot 1997, 20-21).

Supporters would like to dress these measures up in a white coat of “technical expertise,” but that coat looks rather shabby on closer inspection. The most serious problem is that adopting the Boskin Commission’s estimate of inflation would require us to radically change our view of the economy. For example, if we have been overstating inflation by as much as the commission claims, then real income has been growing a lot faster than we thought—so fast, in fact, that most Americans must have been living near or below the poverty level in 1960 (a year in which 57 percent of households owned their own homes and 76 percent had cars). Furthermore, the whole history of declining real wages for the majority of workers over the last two decades will also need to be rewritten—conveniently for some—as an illusion.

Looking toward the future, we get even more interesting results if we accept the commission’s estimate. It means not only that we have underestimated real wage growth in the past but that we are similarly off the mark in forecasting the future. The Boskin future is so bright that the typical wage earner will be hauling in more than $50,000 a year in real (inflation-adjusted) income by 2030, or about twice the typical wage in 1995. The irony of this effort to redo the CPI is that, if its proponents are correct, their rationale for cutting Social Security benefits disappears. We would be cutting benefits for those who spent most of their lives in poverty in order to maintain lower taxes on generations who will have, even by today’s standards, quite healthy incomes. Even the most shameless granny-bashers should have a hard time justifying this kind of redistribution.

Other numbers in the Boskin report don’t make much sense either. To take just one example: the commission argues that the CPI doesn’t adequately take into account quality improvements, such as better gas mileage or the installation of air bags in cars. But the Bureau of Labor Statistics (BLS) makes extensive adjustments for quality. In 1995, the CPI rose 1.8 percent; without the quality adjustments made by the BLS, it would have risen 4.0 percent. This is a large adjustment, but the Boskin Commission, without conducting any original research on the subject, asserts that this is not enough. Their arguments are not convincing. In the case of cars, the BLS asks auto companies how much of their price increases are due to quality improvements. It is hard to imagine that these companies would respond with severe understatements.

The Boskin Commission was stacked with five economists who had previously proclaimed their belief that the CPI seriously overstates inflation. They looked for everything that might support this conclusion while overlooking evidence and arguments that pointed in the opposite direction. The scenario is a sad illustration of what happens when those pursuing a political agenda—in this case the Senate Finance Committee—attempt to corrupt the process of estimating fundamental economic statistics.

Congress has thus far failed to incorporate the Boskin changes, but the issue is far from settled. Indeed, one of the more prominent Social Security “reform” proposals on the table right now, put forth by Senator Daniel Patrick Moynihan, contains a COLA cut.

Social Security and Social Insurance

Social Security is our largest and most successful antipoverty program, keeping about half of the nation’s senior citizens from falling below the official poverty line (SSA 1998b). In 1959, the poverty rate among the elderly was more than 35 percent; by 1970, it was twice the rate of that for the general population. Largely as a result of the Social Security program, it has since fallen to 10.8 percent, or slightly less than that for the general population (SSA 1997). For two-thirds of the elderly, Social Security makes up the majority of their income; for the poorest 16 percent, it is their only source of income (SSA 1998b).

Social Security provides about $12 trillion worth of life insurance, more than that provided by the entire private life insurance industry (Ball et al. 1997, 32). The program’s 44 million beneficiaries today include 7 million survivors of deceased workers, about 1.4 million of whom are children (SSA 1998a, 1). Some 5.5 million people receive disability benefits, including not only disabled workers but also their dependents. For a typical employee, the value of the insurance provided by the program would be more than $200,000 for disability and about $300,000 for survivors insurance (Ball et al. 1997, 32).

The coverage of the program is nearly universal—about 95 percent of senior citizens either are receiving benefits or will be eligible to receive them upon retirement (Advisory Council 1997, 88). For a society that wants to ensure some minimum standard of living for its elderly, this is an important achievement in itself. But it also allows for other accomplishments that would be difficult or impossible to replicate in the private sector. For example, Social Security provides an inflation-proof, guaranteed annuity from the time of retirement for the rest of the beneficiary’s life. The cost of retirement, survivors, and disability insurance does not depend on the individual’s health or other risk factors. And the benefits are portable from job to job, unlike many employer-sponsored pension plans.

The success of Social Security also owes much to the superior economic efficiency of social insurance as a means of providing core retirement income. The program’s administrative costs are a small fraction of the private alternatives: they amount to less than 1 percent of payout (SSA 1996a), as opposed to 12-14 percent for the private life insurance industry. On these strictly economic grounds alone, the case for Social Security is strong.

But social insurance also embodies a different ethic and a different conception of the relation between the individual and society. The ethic is a solidaristic one, which is different from either self-interest or altruism. It transcends this dichotomy in favor of a collective self-interest that promotes the advancement of everyone.

Most of us will grow old and will, either before, or during that time, experience health problems or reduced capacity for work. The ethic of social insurance says that “we are all in this together” and that it is in our collective and individual interest to pitch in and provide for these eventualities and risks. We can contribute when we are relatively young, healthy, and working, and draw benefits when we are not. Some will draw a luckier number in the genetic lottery or inherit wealth or even be more successful or healthy or live longer by virtue of their own efforts or wisdom; but this is no reason to deny the necessities of life to anyone else, any more than we would want our local fire department to ignore calls from the poor, or even from those whose fires were caused by their own carelessness.

The case for social insurance is also grounded in a view of society that differs considerably from the agglomeration of atomized individuals, each maximizing his or her own utility, that forms the foundation of contemporary neoclassical microeconomics. In this broader context, the national product is seen more as a social product, which requires the efforts and cooperation of all who work. Market outcomes are not necessarily fair or just, nor should they determine one’s fate, especially in times of hardship.

Despite the political resurgence of a market-driven ethic in the last two decades, the majority sentiment is probably still closer to the solidaristic ethic embodied in the principles of social insurance. At the very least, this is true for the areas that social insurance has typically covered: protection against the reduced earnings potential and hardships of old age, sickness, disability, and unemployment.

Social insurance has also succeeded in avoiding the stigma and political weaknesses from which means-tested welfare programs have suffered. These weaknesses have been increasingly exploited by politicians since the 1980s, culminating in the elimination of Aid to Families with Dependent Children (AFDC) in 1996. Programs like Social Security and Medicare have been protected from these types of divisive attacks, largely due to their universal coverage and work-based entitlement.

Social Security has also become increasing important in light of what has happened to the other two major sources of retirement income: private savings and employer-sponsored pension plans. The regressive changes in income distribution that have taken place over the last two decades have made it increasingly difficult for most people to save for their own retirement. The median wage actually fell 6.8 percent from 1973 to 1997, and declines have been much worse for those with less education. This is a drastic change from the previous era, from 1947 to 1973, when the typical wage earner saw real gains on the order of 79 percent (Mishel, Bernstein, and Schmitt 1997, 140-43; 1999, 131).

At the same time, private pensions have shifted from defined-benefit plans to defined-contribution plans. In a defined-benefit plan, the employer assumes the risk associated with the return on accumulated pension funds by guaranteeing a specified benefit upon retirement. In defined-contribution plans, such as 401(k) plans, which allow employees to defer compensation tax-free into retirement accounts, the employee assumes the risk. In the past, defined-benefit plans were the norm: 94 percent of those receiving private pension benefits today receive them through defined-benefit plans. But today more employees participate in defined-contribution plans than in defined-benefit plans. Together with the difficulty of saving for retirement out of declining real wages, these trends have made Social Security the one part of retirement income that the majority of Americans can really count on.

All of this makes a strong case for expanding, rather than shrinking, social insurance, especially if we want to counter the now decades-old trends toward increasing inequality and poverty in the United States. As noted in chapter 3, the health care system would be a logical next step in such an expansion. Medicare was an attempt to extend the principles of social insurance to health care, but only partially, since the elderly are still segmented from the rest of the population. Insurance involves the pooling of risk, and from an economic standpoint the most efficient way to do this is to put everyone in one large risk pool. Together with the enormous economies of scale in administration, this is the basis for the superior efficiency of social insurance.

Although Medicare has succeeded in providing access to health care for millions of older Americans and in reducing administrative costs relative to private insurance, it has not been able to contain the explosive medical price pressures that have been generated by the private sector. The rational solution would seem to be to extend social insurance for health care to the rest of the population, thereby eliminating enormous amounts of waste and placing global controls on overall spending. The administrative savings alone, according to some estimates, would be enough to provide health care coverage to the 43 million Americans who are currently uninsured. But it will be difficult to have an informed public debate about the expansion of social insurance as long as widespread misconceptions prevail about our existing programs of Social Security and Medicare.

Copyright notice: Excerpt from pages 1-15 of Social Security: The Phony Crisis by Dean Baker and Mark Weisbrot published by the University of Chicago Press. ©1999 by the University of Chicago. All rights reserved. This text may be used and shared in accordance with the fair-use provisions of U.S. copyright law, and it may be archived and redistributed in electronic form, provided that this entire notice, including copyright information, is carried and provided that the University of Chicago Press is notified and no fee is charged for access. Archiving, redistribution, or republication of this text on other terms, in any medium, requires the consent of the University of Chicago Press.

Internet Use Cuts Depression Among Senior Citizens

2010-02-06T14:21:00.000-08:00

Internet Use Cuts Depression Among Senior Citizens

Spending time online reduces depression by 20 percent for senior citizens, the Phoenix Center reports in a new Policy Paper released today. In addition to the quality of life benefits, the Policy Paper said reducing the incidence of depression by widespread Internet use among older Americans could trim the nation's health care bill.

"Maintaining relationships with friends and family at a time in life when mobility becomes increasingly limited is challenging for the elderly," says Phoenix Center Visiting Scholar and study co-author Dr. Sherry G. Ford, an Associate Professor of Communications Studies at University of Montevallo in Alabama. "Increased Internet access and use by senior citizens enables them to connect with sources of social support when face-to-face interaction becomes more difficult."

The Policy Paper, Internet Use and Depression Among the Elderly, examines survey responses of 7,000 retired Americans 55 years or older. The data was provided by the Health and Retirement Study of the University of Michigan and screened to exclude respondents who were still working and also those living in nursing homes in order to limit possible variations that might skew the findings. These limitations reduced the size of the sample from the initial 22,000 to 7,000, but that is still far larger than all previous efforts to consider the effect of Internet use on psychological well-being of the elderly population. Age 55 is the common age cut off for studies of the elderly. Unlike many existing studies on the benefits of broadband, the statistical methodologies used in the analysis aim to determine causal effects and not simply measure correlations.

Phoenix Center President Lawrence W. Spiwak says, "This is the most advanced statistical analysis on the social impacts of broadband to date, and the most believable. If policymakers want better data analysis, they now have it. The study raises the bar for credible statistical analysis when formulating broadband policy."

The implications of the findings are significant because depression affects millions Americans age 55 or older and costs the United States about $100 million annually in direct medical costs, suicide and mortality, and workplace costs. The Pew Internet & American Life Project estimates that only about 42 percent of Americans aged 65 or more use the Internet, far below the adoption rate of other age groups. Given the relatively low adoption rates by seniors, the study concludes that the opportunity for better health outcomes from expanded Internet adoption is substantial. Further, with billions spent annually on depression-related health care costs, the potential economic savings also are impressive. "Efforts to expand broadband use in the U.S. must eventually tackle the problem of low adoption in the elderly population," says study Phoenix Center Chief Economist and study co-author Dr. George S. Ford. "The positive mental health consequences of Internet demonstrate, in part, the value of demand stimulus programs aimed at older Americans."

The Phoenix Center is a non-profit 501(c)(3) organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of telecommunications and high-tech industries.

Source: Phoenix Center for Advanced Legal & Economic Studies

Chubby Checker and Social Security Commissioner Astrue Announce a New “Twist” in the Law

2010-01-08T11:13:00.000-08:00

Chubby Checker and Social Security Commissioner Astrue Announce a New “Twist” in the Law

SOCIAL SECURITY

News Release

Chubby Checker and Social Security Commissioner Astrue Announce a New “Twist” in the Law

Changes Make it Easier to Qualify for Extra Help with Medicare Prescription Drug Plan Costs

(Printer friendly version)

Michael J. Astrue, Commissioner of Social Security, and Chubby Checker, Grammy Award winner and rock and roll legend, today launched a new campaign to inform millions of Americans about a new “twist” in the law that makes it easier to qualify for extra help with Medicare prescription drug costs. The extra help program currently provides assistance to more than nine million senior and disabled Americans -- saving them an average of almost $4,000 a year on their Medicare prescription drug plan costs. To apply for extra help, there is an easy-to-use online application available at www.socialsecurity.gov.

“The changes in the Medicare law that take effect this month will allow hundreds of thousands of Americans who are struggling to pay their prescription drug costs to get extra help during these tough economic times,” said Commissioner Astrue. “I am thrilled that Chubby Checker has volunteered to help us spread this important message through a new television, radio, and Internet spot as well as pamphlets and posters.”

“Listen up, America! For 50 years, people of all ages and backgrounds have danced the Twist,” Chubby Checker said. “Now it’s important everyone learn about this new twist in the law. Check it out at www.socialsecurity.gov.”

To qualify for extra help, people must meet certain resource and income limits. The new Medicare law eases those requirements in two ways. First, it eliminates the cash value of life insurance from counting as a resource. Second, it eliminates the assistance people receive from others to pay for household expenses, such as food, rent, mortgage or utilities, from counting as income. There also is another important “twist” in the law. The application for extra help can now start the application process for Medicare Savings Programs -- state programs that provide help with other Medicare costs. These programs help pay Medicare Part B (medical insurance) premiums. For some people, the Medicare Savings Programs also pay Medicare Part A (hospital insurance) premiums, if any, and Part A and B deductibles and co-payments.

To learn more about the extra help program and to view the new TV spot featuring Chubby Checker, go to www.socialsecurity.gov/extrahelp.

# # #

SSA Press Office 440 Altmeyer Building 6401 Security Blvd. Baltimore, MD 21235
410-965-8904 FAX 410-966-9973

How Much Lying Will It Take To Break Your Confidence?

2009-11-07T20:27:00.000-08:00

How Much Lying Will It Take To Break Your Confidence?

By Donna Smith
November 7, 2009

So, I wake this morning to see that Speaker Pelosi lied again about why she just could not allow a single-payer amendment to survive the legislative effort in the House on healthcare reform.

Early in the week she said that she couldn’t let the Kucinich amendment survive because it broke the President’s promise that “you can keep what you have if you like it.” See my blog on Michael Moore’s Mike & Me blog for my remarks on that subject.

So, out went the amendment voted into the bill with those ever-prized bi-partisan votes that would have allowed states whose voters and lawmakers pass single-payer plans to be granted necessary federal waivers to do so (read that again, folks, lest you miss the House’s direct squelching of the right you have in our own states to determine the best policy).

Then yesterday we read that praise-worthy as Anthony Weiner’s single-payer substitute amendment was–the one promised to a vote by Speaker Pelosi last July–that it just couldn’t be offered because that would mean the Speaker would have to allow other amendments too–like the abortion funding amendment.

Sorry, she told Mr. Weiner, but I have to be fair about this. The fluttering began and they all praised one another for being so damned agreeable.

Pelosi praises Weiner.

But read it, don’t weep. She’s decided–as Gomer Pyle would say “Surprise, surprise, surprise…”–to allow right-wing crazies another shot in offering their anti-abortion funding amendment.

I say don’t weep because at some point you actually get mad enough to call them out. If an anti- reproductive rights funding amendment becomes law in this bill, it is a slap in the face to so many various groups that it isn’t to be believed. The Republicans and the Blue Dogs do their own big share of lying when they pretend to care about life. Come on, we all know that’s just not reality.

So long as they are passing laws on the federal level that allow 45,000 people to die every year in this nation because they have not been allowed to receive the healthcare that was available to those with the means to pay for it, these folks have no claim to any right to life at all. And so long as they are passing laws on the federal level that allow me and millions of others to go bankrupt even with the health insurance they are forcing us all to buy, they have no claim to protecting my hard work and effort to achieve my own American dream.

Tell the truth, at least. This is all about protecting power and re-election and the money that fuels that process. Damn the people. They’ll just plan to buy us back to the polls with the crappy campaign ads that will commence shortly after the last chorus of “Jingle Bells” in December. And the insurance companies are going to have a very happy holiday season indeed.

Donna Smith is a community organizer for California Nurses Association and national co-chair of PDA's Healthare NOT Warfare campaign.

Strategies to Prevent and Delay Alzheimer’s Disease

2009-11-07T19:31:00.000-08:00

Alzheimer’s Disease Prevention and Delay

How to Reduce, prevent, or delay symptoms of Alzheimer’s disease

Researchers across the world are racing towards a cure for Alzheimer’s disease. As prevalence rates climb, their focus has broadened from treatment to prevention strategies.

Although there are no magic solutions, tantalizing new evidence suggests it may be possible to prevent or delay the onset of Alzheimer’s disease through a combination of healthful habits.

Scientists now suggest you can stimulate your mind, improve your mood, sharpen your memory, and reduce your Alzheimer’s risks. Learn their discoveries and join the race towards brain vitality now.

Strategies to Prevent and Delay Alzheimer’s Disease
Get plenty of exercise Eat a brain-healthy diet Keep your mind active	Sleep regularly and restfully Learn to relax Protect your brain

Prevention and delay strategy #1: Get moving!

According to a recent Mayo Clinic review, no single lifestyle choice has as much impact on aging and Alzheimer’s disease as exercise. In a 2009 review of literature from the International Journal of Clinical Practice, scientists documented that over time, physical activity effectively reduces the probability of Alzheimer’s disease and other dementias. Additional research shows those with existing cognitive problems and dementia receive a protective benefit from regular exercise.

These tips will maximize your exercise plan:

Exercise at a moderate pace-for at least 30 minutes five times per week. Just five workouts every seven days can reduce your risk of Alzheimer’s by as much as 35%. When serious brain damage has already occurred, brisk walking and other cardiovascular exercise can slow further injury.
Build muscle to pump up your brain-moderate levels of weight and resistance training not only increase muscle mass, they maintain cognitive health. Combining aerobics and strength work is better than either activity alone. Add 2-3 strength sessions to your weekly routine, and your risk of Alzheimer’s is cut in half if you are over 65.
Stretch for success-agility not only makes you light on your feet, it improves balance and reduces head injuries. Remember the Tin Man… and reach, twist, and flex often to keep your frame limber and your brain supported.
Think movement-those who are physically active throughout life have improved cognitive forecasts. Gardening, cleaning house, and taking the stairs build brain-healthy movement throughout the day. Look for opportunities to walk, bend, stretch, and lift your way to vitality.

Stuck on the couch?

It takes 28 days for a new routine to become habit. Write realistic goals on a workout calendar and post it on the fridge. Build in frequent rewards, and within no time, the feel-good endorphins from regular exercise will help you forget the remote…and head out the door.

See Making Exercise Fun and Senior Fitness and Sports

Prevention and delay strategy #2: Eat a brain-healthy diet

In Alzheimer’s disease, inflammation and insulin resistance injure neurons and inhibit communication between brain cells. In Freedom from Disease, Alzheimer’s is described as “diabetes of the brain,” and a growing body of information suggests a strong link between metabolic disorders and the signal processing systems. In addition, the American Academy of Neurology

recently warned elevated cholesterol in your 40’s increases your risk of Alzheimer’s.

Eating habits that reduce inflammation and promote normal energy production are brain-healthy. These food tips will keep you protected:

Follow a Mediterranean diet. Control inflammation by eating foods rich in Omega 3 fatty acids, cold water fish, nuts, whole grains, and abundant fresh produce. Avoid transfats, full-fat dairy products, and red meat, but treat yourself to a glass of red wine and a dark chocolate square.
Maintain consistent levels of insulin and blood sugar. Eat several small meals throughout the day. Avoid packaged, refined, and processed foods, especially those high in sugars and white flour, which rapidly spike glucose levels and inflame your brain.
Eat across the rainbow. Emphasize fruits and vegetables across the color spectrum to maximize protective anti-oxidants and vitamins. Daily servings of berries and green leafy vegetables should be part of a plant-centered, brain protective regimen.
Drink tea daily. Green, white, and oolong teas are particularly brain-healthy. Drinking 2-4 cups daily has proven benefits. Although caffeine can inhibit stress reduction and become addictive, moderate coffee drinkers also enjoy reduced cognitive risks.
Consider supplementing your diet. Vitamins, herbs, and amino acids may provide additional brain protection. Folic acid, vitamin B12, vitamin D, and fish oils are believed to preserve and improve memory. Studies of vitamin E, gingko biloba, and tumeric have yielded more disappointing results. Talk to your doctor about medication interactions, and review current literature to make a personal decision about the costs and benefits of dietary supplements.

Prevent and delay Alzheimer’s with simple strategies for better nutrition. Read Tips for a Healthy Diet.

Prevention and delay strategy #3: Build brain reserves

According to the 2008 Wall Street Journal review “Neurobics and Other Brain Boosters,” an active, stimulated brain reduces your odds of developing Alzheimer’s. Those who remain engaged in activities involving multiple tasks, requiring communication, interaction, and organization, who continue learning, and constantly challenge their brains earn the greatest protection.

Cross-training with these brainpower activities will keep your mind sharp:

Set aside time each day to learn something new - read a good book, study a foreign language, play a musical instrument. The greater the novelty and challenge, the larger the deposit in your brain reserves.
Practice memorization - start with something short and progress to the 50 U.S. capitals. Create rhymes and patterns to strengthen your memory connections.
Solve riddles and work puzzles - brain teasers and strategy games provide great mental exercise and build your capacity to form and retain cognitive associations. Look for activities that use both sides of your brain…logic and language versus artistic and creative challenges.
Practice the 5 W’s - observe and report like a crime detective. Keep a Who, What, Where, When, and Why list of your daily experiences. Capturing visual details keeps your neurons firing.
Follow the road less traveled - take a new route, eat with your other hand, rearrange your computer desktop. Vary your habits regularly to create new brain pathways.

To learn more about harnessing your brainpower, read Tips and Techniques for Memory Enhancement

Prevention and delay strategy # 4: Sleep to restore memory

Your brain needs regular, restful sleep to process, store, and recall information. Nightly deprivation not only leaves you cranky and tired, but according to memory experts Dr. Andrew Weil and Dr. Gary Small, poor sleep can significantly damage your brain and central nervous system.

These tips will help you catch your Z’s and quiet the demons that keep you awake:

Establish a regular sleep schedule. Going to bed and getting up at the same time reinforces your natural circadian rhythms. Your brain’s clock responds to regularity, and long term disruption has been associated with heart disease, cancer risks, and cognitive problems.
Set the mood. Reserve your bed for sleep (and sex), take a hot bath, and dim the lights. Brisk evening exercise, comfortable temperatures, and white noise machines can also signal your brain that it’s time for deep restorative sleep.
Stop snoring, dear! Alcohol, smoking, sedating drugs, excess weight, high blood pressure, and clogged nasal passages can rock the timbers. Snoring may signal sleep apnea, a respiratory condition that threatens your heart and mind. A new study from the University of California at San Diego estimates seventy to eighty percent of Alzheimer’s patients experience sleep apnea. Cognition is frequently improved following Continuous Positive Airway Pressure (CPAP) treatment, which mechanically regulates the rise and fall of blood pressure and oxygen to the brain.
Quiet your inner chatter. When mental dialogues keep you awake, get up. Try reading or relaxing in another room for twenty minutes then hop back in. If repeating this cycle doesn’t work, check your stress levels. Your memory may depend on it.

Can Sleep Prevent Alzheimer’s Disease?

Do you wake up refreshed? Can you remember your dreams? Deep, dreamy sleep is critical for memory formation and retention. If nightly sleep deprivation is slowing your thinking and affecting your mood, you may be at greater risk of Alzheimer’s disease.

See: Sleeping Well: What You Need to Know and Tips for Better Sleep

Prevention and delay strategy #5: Learn to relax and manage stress

According to USC’s Dr. Vincent Fortanasce, lifelong stress can double or quadruple your chances of Alzheimer’s disease, yet simple daily tools can minimize its effects. The harmful stress hormone cortisol hampers nerve cell growth and connection and accelerates cognitive decline, premature aging, depression, diabetes, and other assaults on your brain.

Conquer cortisol with these proven techniques:

Breathe! Stress alters breathing rates and impacts brain oxygen levels. Turn off your stress response with quiet, deep, abdominal breathing. From momentary inhale, hold, and exhale sequences to guided group exercises, restorative breathing is powerful, simple, and free!
Schedule daily relaxation activities - From a walk in the park or petting your cat to Tai-chi, guided imagery, or yoga, make relaxation a priority. Keeping cortisol under control requires regular effort.
Stay connected - We are social creatures, and the most connected fare better on tests of memory and cognition. Developing a strong support system through family, friends, exercise groups, clubs, and volunteer activities improves mood and slows cognitive decline.
Nourish inner peace - Most scientists acknowledge a strong mind-body connection, and various studies associate personal spiritual activities with better cognitive aging. Regular meditation, prayer, reflection, and religious practice may immunize you against the damaging effects of stress.

For tips to relieve stress in the moment, read How to Manage Stress.

Prevention and delay strategy #6: Protect your brain

By the time Alzheimer’s disease appears, irreversible damage has already occurred. Preventing and delaying Alzheimer’s includes three protective tips:

Avoid toxins - Among the most preventable risk factors for Alzheimer’s disease are smoking and heavy drinking. Not only does smoking increase the odds for those over 65 by nearly 79%, researchers at Miami’s Mt. Sinai Medical Center warn that a combination of these two behaviors reduces the age of Alzheimer’s onset by six to seven years. If you stop smoking at age, the brain benefits from improved circulation almost immediately. Brain changes from alcohol abuse can only be reversed early.
Wear a helmet - and limit distractions. A National Institute of Health study suggests head trauma at any point in life significantly increases your risk of Alzheimer’s. Dr. Andrew Weil cautions that repeated hits in sports activities including football, soccer, and boxing, or single traumatic injuries from bicycle, skating, or motorcycle accidents make Alzheimer’s disease more likely in later life. Preserve your brain by wearing properly fitting sports helmets, buckling your seatbelt, and trip-proofing your environment. Avoid activities that compete for your attention—like driving with cell phones and running with your MP3 player. A moment’s distraction can lead to a brain-injuring thud!
Create a brain-safe environment - The evidence on modern technology is mixed. Scientists continue to examine links between neurodegenerative diseases like Alzheimer’s and exposure to environmental contaminants. UCLA’s Memory Center Director Gary Small warns that lead, pesticides, mold, and other substances in your environment may damage your brain. Studies on the impact of electromagnetic energy from cell phones are still debated. Although definitive links to Alzheimer’s can be elusive, making choices that limit chronic exposure to environmental harm makes good sense.

Act now to prevent and delay Alzheimer’s disease

It is never too early or too late to protect yourself and your family against Alzheimer’s. Start a multi-step strategy now, and begin actively preventing or slowing this disease.

The race to cure Alzheimer’s is expected to continue for some time. Investing in your diet, exercise, mental stimulation, and rest will help you feel better now and keep your brain working stronger…longer.

Alzheimer’s Disease Symptoms and Stages: Understanding the warning signs	Stress Management: Relax and unwind to keep Alzheimer’s in check
Healthy Eating: Tips for A Healthy Diet: Simple strategies to delay Alzheimer’s disease	Improving Your Memory: Mental aerobics and brain strategies for preventing Alzheimer’s disease.

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No Social Security COLA increase for 2010

2009-11-02T11:51:00.000-08:00

No Social Security COLA increase for 2010

If investors need another sign of the changed economic landscape, they need look no further than Social Security.

For the first time in more than three decades Social Security recipients will not receive a benefit increase, formally known as a cost of living adjustment (COLA), in 2010, federal forecasts show, The New York Times reports.

COLA is determined by a formula set by federal law, and it roughly parallels the consumer price index, though the two formulas are not identical. Senior citizens can get a ballpark estimate of their likely annual benefit increase from the consumer price index's rise.

Once cost increases reach a certain level, or threshold, the COLA is triggered for Social Security. The fiscal 2009 increase was 5.9 percent, and there's been a Social Security COLA every year since 1975.

No inflation, no COLA

However, both the Obama administration and the Congressional Budget Office (pdf) are forecasting that Social Security beneficiaries will not receive any cost of living adjustments in fiscal 2010 or 2011. The reason? The pronounced recession in the United States, which has created pricing pressure -- not pricing power -- for businesses. Pricing power is so weak for firms that the Federal Reserve believes the nation is more likely to experience a bout of deflation -- not inflation -- at least through mid-2010, and perhaps for a longer period.

Deflation -- a protracted, systematic decline in prices and wages -- occurs in pronounced recessions and in other conditions during which demand is nonexistent, and it robs companies of the ability to increase revenue and hurts the economy's ability to grow. If it takes hold, that's another hurdle policymakers will have to grapple with as they attempt to end the U.S. and global recessions.

The lack of a COLA adjustment would represent a net-gain in revenue for the Social Security operation, although there will be some subtractions to revenue, due to the fact that Medicare Part B premium increases are linked to Social Security's COLA and cannot rise more than the COLA. Hence, if there is no COLA, the Part B premium can not increase.

However, the lack of a benefit would also feed fewer dollars into the U.S. economy at a time when it needs all the demand pressure it can get, due to a smaller workforce stemming from layoffs and belt-tightening across the nation, senior citizens included.

Economic Analysis: The net result of no 2010 COLA is that millions of Social Security recipients will see their monthly benefit check reduced for the first time. Though the amount would be small, it represents another incremental reduction in income -- like a small increase in an electric utility rate or a small property tax increase -- that reduces the amount of money Americans have to spend, save, or invest. When combined, these incremental cuts place a substantial drag on the economy and are one major factor cause of the declines in retail sales and discretionary purchases.

Further, there's virtually no chance that Congress will revisit the COLA formula. The COLA stems from a grand political consensus that took years to negotiate and forge, and that fact, combined with the generation redistribution that already occurs under Social Security (the system redistributes income from younger generations to older generations), all point to lawmakers letting the inflation protection work as designed.

Information About 2010 Social Security Cost-of-Living Adjustment

With consumer prices down over the past year, monthly Social Security and Supplemental Security Income benefits will not automatically increase in 2010. The following resources provide more information:

Press Release: Prompt Passage of Economic Recovery Act Payment for 2010 Needed - Law Does Not Provide for a Social Security Cost-of-Living Adjustment for 2010

Effect of COLA on Social Security Benefits

Fact Sheet: Cost of Living Adjustments

Frequently Asked Questions

What are the COLA, tax, benefit and earning amounts for 2010?

What is a cost-of-living adjustment (COLA)?

Who determines the CPI-W?

Why is there no COLA for 2010?

If there is no COLA, will my benefits stay the same?

Will the maximum taxable earnings amount change in 2010?

Will the retirement earnings test exempt amounts change in 2010?

If Medicare premiums increase in 2010, will my Social Security benefit be reduced?

How long has Social Security had COLAs?

President Obama Calls on Congress to Extend Economic Recovery Payment for 2010

2009-11-02T10:40:00.000-08:00

The White House

Office of the Press Secretary

For Immediate Release

October 14, 2009

President Obama Calls on Congress to Extend Economic Recovery Payment for 2010

Conference Call with Senior Administration Officials at 4:30pm ET (details below)

WASHINGTON, DC-President Obama announced his support for an additional $250 Economic Recovery Payment to the seniors, veterans and people with disabilities who are struggling to make ends meet with retirement savings that have not fully recovered from their losses over the first year of the recession.

"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession. That is why I am announcing my support for an additional $250 in emergency recovery assistance to seniors, veterans, and people with disabilities to help them make it through these difficult times. These payments will provide aid to more than 50 million people in the coming year, relief that will not only make a difference for them, but for our economy as a whole, complementing the tax cuts we’ve provided working families and small businesses through the Recovery Act," said President Obama. "This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis. I want to compliment all the members of Congress who have been working to address these challenges, especially Senators Reid, Baucus, Sanders, and Lincoln, Speaker Pelosi, and Representatives Rangel, McCarthy, and DeFazio."

Fact Sheet

The President’s proposal would provide an additional year of the $250 "Economic Recovery Payments" initially enacted under the American Reinvestment & Recovery Act (ARRA). Under this proposal:

57 million people would benefit. These include 49 million Social Security beneficiaries, 5 million Supplemental Security Income beneficiaries, 2 million veterans benefit recipients, 0.5 million railroad retirement and disability beneficiaries, and also about 1 million public-employee retirees not entitled to any of the previous benefits.
The benefit would be $250 – or equivalent to a 2 percent increase in benefits for the average Social Security retiree beneficiary. Under the rules no person could "double dip" and receive a $250 Economic Recovery Payment through more than one program. Nor could they receive both an Economic Recovery Payment and the Making Work Pay tax credit.
The total cost of the proposal would be $13 billion – and would not hurt the solvency of Social Security. The President is committed to ensuring that the $13 billion cost of the proposal does not reduce the solvency of Social Security or other social insurance programs.
Would extend an effective relief program. To date Economic Recovery Payments have been made to 55 million people including seniors, veterans and people with disabilities and totaled $13.7 billion. Most of the checks were mailed out in May 2009.

In addition to this legislative proposal, the Internal Revenue Service and the Department of Treasury will take steps this week to prevent reductions in the amounts that workers can contribute to IRAs, 401(k)s, and other aspects of tax-favored retirement systems in 2010 that some feared could result from negative inflation over the past twelve months.

4:30PM CONFERENCE CALL DETAILS

Today at 4:30PM EDT, the White House will hold a background conference call with senior Administration officials to brief reporters in advance of Thursday’s expected announcement on the cost of living adjustment (COLA).

WHAT: TODAY, Wednesday, October 14, 2009 4:30PM EDT

DIAL-IN: (888) 428-4474

Reverse Mortgage Nightmare

2009-11-02T09:25:00.000-08:00

Personal Finance Advice

Bridging the gap between saving money and investing

Reverse Mortgages – Only Consider as a Last resort

Posted by pfadvice

By David John Marotta and Beth Anderson Nedelisky

Before reverse mortgages, pensioners wishing to tap into home equity were presented with two options: either sell the house or get a home equity loan. But since their humble beginnings in the late ’80s, reverse mortgages provided seniors with an additional tool for accessing home equity. The going offer: get cash now, make no monthly payments, and keep your home sweet home. For retirees struggling to make ends meet, a reverse mortgage can provide a much-needed way forward.

A reverse mortgage should be considered only as a last resort. With early retirement planning, such ‘last resort’ options can be easily avoided. Still, reverse mortgages are a far cry from the blinking neon signs offering fast cash in exchange for a car title. At least with a reverse mortgage the borrower gets to keep the title and avoid the ugly monthly payments.

To understand the way a reverse mortgage works, let’s look at its opposite: the traditional home mortgage. Both are mortgages. But with a standard home loan — also known as a forward mortgage — over time the homeowner’s equity rises and the debt falls. A reverse mortgage does just the opposite. With a reverse mortgage, the debt rises and the homeowner’s equity falls.

Unlike a home equity loan or a home equity line of credit which immediately begin monthly collections on the loan, no payment is due on a reverse mortgage until the borrower sells or moves. Borrowers are given a guarantee of lifetime occupancy of the home. But, once the borrower no longer resides at home, the loan must be repaid. Typically, repayment is made from the proceeds from the sale of the home. The good news here is a reverse mortgage will not hold the borrower personally liable nor can they owe more than the market value of the home.

Minimum qualifications require borrowers to be age 62 or over and must either own their home free and clear or have little remaining debt against the house. But, meeting the initial requirements won’t mean the loan is a done deal. Borrowers should be prepared for an extensive interview and educational component before they can sign on the doted line.

Reverse mortgages are becoming ever more popular, in part, due to the customizable distribution options. Seniors may choose to receive one lump sum or monthly advances — either for a limited time or spread out over the course of their lifetime — for as long as they reside in the home. Others may choose to open a line of credit or pick a combination of payment options to suit their cash flow needs.

But, the convenience offered by a reverse mortgage comes with a price tag. Although loan fees can be financed as part of the loan, origination fees can easily cost borrowers in the neighborhood of $12,000- $18,000. Add to that the principal loan amount, interest, and maintenance fees, and the total cost will likely account for a sizeable portion of the home’s total value, if not all of it.

In addition to the costs of maintaining the home, borrowers are also expected to continue home owner’s insurance and property tax payment in addition to paying for routine maintenance on the home.

Currently, reverse mortgages come in three flavors: single-purpose, proprietary, and federally-insured loans. Single-purpose reverse mortgages are very low-cost. But, unlike the other two, they can only be used for one purpose, such as paying property taxes or making house repairs. Proprietary loans are offered through private banks. Although they are more expensive, they lend larger sums. Of the three loans types, the most common is the federally insured Home Equity Conversion Mortgage (HECM).

The actual amount a homeowner can hope to borrow using a reverse mortgage will be significantly less than the market value of the home itself. Although a HECM offers lower interest rates than private lenders, borrowers are subject to regional 203b loan caps ranging from $200,160 to $362,790. Ultimately, the total loan amount will be determined by the value of the home or the regional loan cap (whichever is less), the borrower’s age and the going interest rate.

So how do you know if a reverse mortgage is right for you? AARP advises prospective borrowers to consider three questions: How much would I get?, How much would I pay? and How much would be left at the end of the loan?

Although the lender almost always wins, a reverse mortgage does offer a Band-Aid solution to pending cash flow problems. Some seniors take the loan to eliminate remaining forward mortgage payments still owed on their home. The majority, though, choose a reverse mortgage to pay medical bills. In either case, a reverse mortgage allows the homeowner to live at home while shoring up immediate, and even long-term, cash flow shortfalls.

There are some cases in which you should never take a reverse mortgage. Avoid a reverse mortgage if you are close to the minimum age requirement. Assuming a reverse mortgage early on will provide you little income and will ensure you will have no equity left in your home at the end of the road. If you currently have little equity in your home, a reverse mortgage is also not worth the cost of the loan origination fees. The fees alone will likely eat up what little equity you have. Finally, avoid a reverse mortgage if you expect to move in the near future. The hefty costs of getting the reverse loan will be wasted and the loan will come due as soon as you move out of the home.

Before going forward with your reverse mortgage, consider your options carefully. There are many creative ways of managing cash flow needs without taking a loan against the value of your home.

As always, begin by looking at your budget and cutting unnecessary expenses. Generating additional income may be as simple as renting out a portion of your home. Or, you may consider moving to an area with a lower cost of living. Sell high and buy low. Then, invest the profit from the sale of your home. By doing so, you may be able to create a permanent cash stream without taking on any debt at all!

Finally, investigate community assistance programs. You may find that you qualify for additional social security benefits or for property tax relief.

More information about reverse mortgages can be found by visiting the AARP website at AARP. Of course, the best way to avoid a reverse mortgage is by planning early for retirement.

David John Marotta and Beth Anderson Nedelisky work at Marotta Asset Management, Inc. of Charlottesville which provides fee-only financial planning and asset management.

Image courtesy of *Susie*

Consider the consequences of serious if a seriously debilitating illness is discovered after you have signed away your home. Consider all options and possibilities (within reason) before deciding.

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