In 1999, Tyra L. Brown testified at a House Committee on Ways and Means hearing about how Social Security helped her grandma take care of her after her mom passed away.

Abigail Meinke was 14 in 1996. That year, she, along with her 11-year-old brother, Patrick, and 18-year-old sister, Samantha, experienced a terrible loss when her father passed away unexpectedly.

The ensuing years were difficult, both mentally and financially, for the Kewadin, Mich.-based family. Connie Meinke, the children’s mom, felt she needed to be home with her kids after such a life-changing event, but she knew that being there for them wouldn’t put food on the table.

“I didn’t even think about Social Security until my father-in-law said, ‘Well, you need to apply for this,’” Connie remembers. “It was a terrible feeling to think that you had to go on something like this. But on the other hand, there was a safety factor and a relief because you knew it was going to help your children.”

On January 26, 2005, the National Academy of Social Insurance held a briefing on the implications for children and families of Social Security reform proposals.

When a worker dies, his or her surviving spouse and children are usually entitled to Social Security benefits. Children can collect benefits up to the age of 18 or until 19 if they are still in high school, according the Social Security Administration. A spouse of a worker who dies can collect benefits for caring for the worker’s child who is under age 16.

The Meinke family’s Social Security earnings, which ranged from approximately $700 a month in 1996 to $1100 a month when Patrick graduated from high school, were a tremendous help: Connie purchased Blue Cross/Blue Shield health insurance for Abigail and Patrick and was able to save some money for them to go to college. She also helped them buy a used car to get to and from school and work. (Because Samantha graduated from high school soon after her dad died, she was only eligible for Social Security payments for a few months.)

Not All About Retirement
Tyra L. Brown, a recent graduate of Howard University in Washington, DC, can relate to the Meinke’s situation. In 1999, she testified before the Subcommittee on Social Security of the House Committee on Ways and Means about the program’s impact on her after she lost her mother to heart failure. Brown was 15 when her mom passed away, and her grandmother ended up raising her.

Social Security’s History President Franklin D. Roosevelt signed the Social Security Act on August 14, 1935. According to the Social Security Administration, taxes were collected for the first time in January 1937 and the first one-time, lump-sum payments were made that same month. Regular ongoing monthly benefits started in January 1940. Under the 1935 law, social security only paid retirement benefits to the primary worker. A 1939 change in the law added survivors’ benefits and benefits for the retiree's spouse and children. In 1956 disability benefits were added.

“Most people think of Social Security as a retirement program—and it is,” she said. “But what a lot of people don’t know is that Social Security also helps out millions of people, like myself, who are not retired.”

In fact, the Social Security system today pays more benefits to children than any other federal program. About 3 million children receive Social Security as dependents of deceased, disabled, or retired workers, reports the National Academy of Social Insurance. Just over 2 million children do not receive Social Security themselves, but live with relatives who do.

“We could count on that income to be there every month, and without it, we couldn't have made it,” Brown recalled.

The Reform Front
President George W. Bush has signaled that reforming Social Security will be a priority for his administration.

The program currently pays roughly a half trillion dollars a year to about 47 million recipients. Those payments are funded through payroll taxes. Since the program was established back in 1935, payroll tax receipts have exceeded benefit payouts, and the excess has gone into the Social Security Trust Fund. But analysts expect that by 2018, as millions of baby boomers begin to retire, the system will begin paying out more in annual benefits than it takes in from payroll taxes.

According to some estimates, Social Security’s trust fund could be depleted by 2042, and the system would then have to rely exclusively on annual revenue from the payroll taxes paid by workers and their employers. Under that scenario, the program would be able to meet about 75 percent of its yearly financial obligations.

There are many ways to preserve the system, but not many are politically popular. Among the options: increasing the retirement age, raising payroll taxes, changing the point at which income from wages becomes exempt from the payroll tax (right now, annual wage income amounts over $90,000 are exempt), and reducing the system’s payouts. That might be accomplished by changing the formula that is used to increase benefits over time, or benefits to wealthy individuals could be trimmed.

At a Brookings Institution briefing in Washington, DC earlier this month, several Social Security experts theorized that the reason so much attention is being paid to reform now is that once baby boomers begin to retire and receive benefits, their clout as a voting bloc will make reform even more politically difficult.

Where Do Kids Fit?
In light of current talk about Social Security reform, people like Connie Meinke wonder if politicians are seriously taking the protections it offers to young individuals into account.

Advocates for kids with disabled and retired guardians are concerned, too. Jennifer Laa, a program manager with the Kid’s Social Security Disability Project in Hawaii, wonders how reform proposals might negatively affect the children of disabled caretakers.

Disability and survivor benefits that aid children are calculated using similar formulas to those that determine the retirement benefits that older Americans receive. Analysts point out that if a reform plan were to change the formula, then disability and survivor benefits could be affected unless the programs were separated.

In a recent press report by The Washington Post, President Bush indicated that he hasn’t considered making changes that would affect the approximately 40 percent of Social Security recipients who receive disability or survivor benefits. “Frankly, our discussions in terms of reform have not centered on the survivor-disability aspect of Social Security,” Bush told the Post. “We’re talking about the retirement system of Social Security.”

Donna Butts, director of Generations United, an intergenerational advocacy organization, says advocates need to be vigilant about holding Bush to his words. “It’s going to be up to all of us to make sure they don’t forget about this,” she says. “I think it’s something that will easily not be addressed because it has a low profile.”

Personal Accounts and the Youth Angle

Raising the Profile In recent years, officials with the Social Security Administration have taken steps to educate younger citizens about the system. Since 2002, the administration has offered a section on its Web site for elementary students called “Kid’s Place.” Cartoon animals talk about basic Social Security concepts and share the importance of saving and planning. http://www.ssa.gov/kids/kids.htm Says one lion, “When I used to chase the cows, I couldn't get them because they stuck together. I was able to get them, one by one after they fought and separated.” The moral, according to the site, is “United we stand: divided we fall. Social Security protects everybody.” “We always try to educate everybody about Social Security,” says Mark Hinkle, a spokesman for the administration, regarding the site. “And this is a good way to reach younger kids that we might not reach otherwise.”

Regarding the retirement aspect of Social Security, President Bush has advocated for voluntary personal accounts, in which a percentage of workers’ Social Security payroll taxes could be invested in the stock market. According to the President, personal accounts would give younger people the opportunity to receive higher benefits than the current system can afford to pay, and provide ownership, choice, and the opportunity for workers to build a nest egg for their retirement and to pass it on to their spouse or their children.

Recent polls indicate that individuals in the 18 to 29 age group are most likely to think that personal accounts are a “good idea.”

Peter Orszag, a senior fellow in tax and fiscal policy at the Brookings Institution, argues against Bush’s personal account plan. He says that Social Security is supposed to provide a core layer of financial support during particular times in life. He notes that as the system stands now, benefits are protected against stock market collapses and inflation.

Eugene Steuerle, a senior fellow at the Urban Institute, says personal accounts might have a role to play, but he adds that they are getting too much attention and take away from the difficult discussion of other necessary reforms.

For example, White House officials have also raised the prospect of changing how Social Security retirement benefits are calculated by tying them to price changes, rather than wage changes. Analysts say this route could result in benefits growing significantly more slowly for future retirees because wages generally increase faster than prices.

Life’s Lessons

The Social Security Administration offers an online Teacher’s Lounge

By now, almost ten years after her dad’s death, Abigail Meinke has not only been a beneficiary of Social Security, but has begun to contribute to the system. At 22, she’s attended the University of Michigan, worked as a waitress and done some modeling. She’s already paid many payroll tax dollars into the Social Security system.

Even having benefited from the program as a teen, she sometimes complains about how much is taken out of her check. To Abigail, Social Security is kind of a nameless, faceless thing, according to her mom.

Still, Connie Meinke thinks that having survived on Social Security taught her children some important lessons. “I did counsel them about spending it and not wasting it and those types of things,” she says. “They are aware that it did help them. You can’t help but connect it back to our situation.”

Tyra L. Brown, now in her twenties, also believes that being on Social Security as a teenager made her much wiser about the system. “When I pay my Social Security taxes, I'm not thinking about the best plan to get rich,” she testified in 1999. “I’m thinking about the best plan for my economic security. I want to be sure that it will be there for my retirement or in case of a tragic circumstance—guaranteed. I know that Social Security needs to be strengthened, and I know that there has to be a way to do it that preserves that vital guarantee.”

Resources:

• Social Security Administration
• National Academy of Social Insurance
• Generations United

Rob Capriccioso is a staff writer for Connect for Kids.