Editorial

Doomed from Birth: The Ida May Fuller Story

josePh C. Paviglianiti, m.D.

It seems like everybody is retiring these days, especially physicians. Just in the Fox Chapel/Monroeville area alone, well over 10 pediatricians have retired, or moved onto something “non-clinical,” in the short time since COVID started 2 years ago. That’s a lot of pediatricians calling it quits in a small area. The same thing is happening to physicians all over western Pennsylvania. Lots of factors are at play, but the overwhelming reason seems to be that physicians are just tired of banging their heads against a wall. The daily grind, and all that’s entailed with it, has squashed out much of the joy of taking care of others. In that foreboding spirit, just 6 months ago I sat down and calculated how many days until my Full Retirement Age (FRA), which is 67 (for those of us born after 1960). I created a “Dad’s Retirement Countdown” sign (June 30, 2032 !!) and thumbtacked it to the wall over my messy desk at home. This caused quite a bit of unexpected curiosity and angst amongst my kids, whom I think never before contemplated that dad would slowly fade away as they stepped up to their individual financial responsibilities, or that such a time was in the distant, yet foreseeable future, God willing. Truth be told, I hadn’t realized, or at least not really internalized, that my FRA had been pushed back to 67 until I started writing this editorial… my original retirement sign was for June 30th, 2030 (age 65). I’m sure I have read it before, but 67 really just sunk in as I wrote this article. Now I gotta redo the sign and work for 2 more years. Crap!

All this recent retiring of my colleagues got me to thinking about Social Security. Sure, we have all heard the doom and gloom that Social Security is going broke. But is it really? What does that mean to me and those younger than me?

America’s first Social Security program was actually the Civil War Pension Program, though these were only paid to Union soldiers, later with survivor benefits. This opened the door for 95-year-old retired Union soldiers to marry 18-year-old brides, so the latter could have survivor benefits and the former could die happy. In fact, the last Civil War bride was receiving a Civil War pension until 1999! But, other than Union Civil War veterans, the general American populace had no such retirement plan. Corporate and/or government pensions didn’t exist. A lifetime of work resulted in a pocket-watch at best.

The depression of the 1930s brought the problem of increasing numbers of elderly poor to the forefront. A variety of pension programs had been proposed since the industrial age started in the mid-1800s, most of which involved some sort of taxation of the rich, but none of them really got anywhere because they were perceived as “welfare” programs, which left a bad taste in most Americans’ mouths. America was a “pick yourself up by your bootstraps” country and “welfare” was for lazy people.

Franklin Delano Roosevelt came along and changed the conversation from “retirement welfare” to “social insurance.” This was a new concept where people actually “contributed” to their future retirement pension through mandatory paycheck deductions (i.e., FICA). In June 1934, the Committee on Economic Security (CES) was created to dream up a plan and by January 1935 the Social Security Act

was proposed. With few changes, the bill passed with large bipartisan support; The Social Security Act was signed into law by FDR on August 14, 1935. Fourteen months from start to finish!! The following year, 1936, was used to gather “worker” information across the country with the help of the US Postal Service, who distributed and collected informational applications (demographic info, work history, etc.). Prior to this, there was no national registry of “occupations, hours worked, etc.,” so this was a huge undertaking. Social Security Numbers and accounts for all Americans were created. Grace Dorothy Owen of New Hampshire received SSN# 001-010001. I’m assuming that is common knowledge since I found it on the Social Security website, otherwise, sorry Grace for revealing your personal info. In retrospect, what an amazing accomplishment to create the Social Security system, gather worker info, and begin collecting and distributing money in just over two years. And the program has survived almost 90 years !!!

On January 1st, 1937, all American workers started having retirement deductions taken from their paychecks. These Federal Insurance Contributions Act (FICA) taxes were collected and put into the Social Security Trust Fund. For the first 3 years (1937-39), while the trust fund was building up a cash reserve, those who retired from 1937-1939 were paid a single one-time lump sum. Ernest Ackerman, a trolley operator from Cleveland, retired on January 2, 1937, one day after the Social Security program began. During his one day of participation in the Social Security program, 5 cents was withheld from his last pre-retirement paycheck. Upon retirement the next day, he received the first ever lump sum payout from the Social Security program, for a whopping 17 cents!

Others were more fortunate. By 1940, the Social Security Trust Fund had built up enough cash reserves to pay a monthly benefit “until death.” The first monthly payout was to Ida May Fuller of Vermont. A teacher/ secretary, she started working in 1896, but only paid into the Social Security program at its inception, starting in January 1937.Over the last 3 years of her employment from 1937-1939, she paid a sum total of $24.75 of FICA payroll deductions into the Social Security System. She retired in November of 1939 (age 65) and on January 31, 1940, she became the first recipient of the new monthly Social Security check, in the amount of $22.54 per month. In a harbinger of the future of the Social Security program, she lived until age 100, and her monthly Social Security payout totaled $22,888.92! Not bad for a $24.75 investment…but an ominous omen for the program.

Over the years, many changes have been made to the Social Security system: survivor benefits, child benefits, SSI/disability, Cost of Living Adjustments (COLAs), etc. But how long can the system last before running out of money? It’s all a matter of 1st grade math: Social Security funds “in,” minus payouts “out.” The United States government is forbidden from “stealing” from the Social Security Trust Fund cash reserve for any reason, not even to build a border wall. In 1940, there were 222,488 retirees receiving Social Security and the fund paid out $35 million in claims that year. In 2008, there were over 50 million retirees/ recipients of Social Security, receiving a total of $615 billion in payments that year. The math went bad in 1983, when Social Security started paying “out” more than it took “in,” thus depleting the cash reserve. To rectify this, the government started to tax Social Security benefits, which previously had been untaxed. This solved the issue, and the Social Security Trust Fund cash reserve started to grow again. For years, though, the actuaries and financial wonks could see down the pike that in 2019, the math would go bad again, and indeed, in 2019 things had reversed. Starting in 2019, the Social Security system is paying “out” more than it takes “in”, taking “in” $1 trillion and paying “out” slightly more than $1 trillion. The Social Security Trust Fund cash reserves still exist (Social Security Trust Fund cash reserves were $2.9 trillion at the end of 2020), but if no reforms are enacted, these cash reserves, which pay “full” monthly benefits to retirees, will be depleted by 2034.

Does that mean Social Security will be broke in 2034? No. But after that, the system will only be able to pay “out” what it takes “in” each year (no cash reserves to make up the difference). This would mean an approximate 25% reduction in projected monthly Social Security benefits to retirees starting in 2034. The pandemic, with fewer workers and subsequently lower wage/ FICA taxes being collected has really hurt the system as well. Currently, in 2020, 89.6% of Social Security trust funds come from FICA payroll taxes (6.2% of paycheck from the employee, 6.2% from employer; 12.4% from self-employed). This comes to

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approximately $1 trillion dollars “into” the Social Security Trust Fund cash reserves per year. Income taxes on Social Security payments to retirees bring in another 3.6 % ($40.7 billion/ yr) to the reserve. The trust fund earns interest, which generates 6.8% of the cash reserve ($76 billion/yr).

Is Social Security something that was doomed from the start? Maybe, due to the Ida May Fuller effect. But multiple national polls show widespread support for continuing Social Security, on both sides of the political aisle and among over 86% of our very politically diverse and divided population. More solutions are needed, but the Social Security fund has faced financial insolvency before and reforms were enacted to save it. As my retirement date of June 30th 2030 2032 looms ahead, I realize it is a decade away, yet will be here before I know it. Here’s hoping that our government can cooperate enough and have enough foresight to hammer out a new solution to ensure the survival of Social Security without too much decline in benefit payout. While never intended to be one’s full retirement income plan, for many Americans, the Social Security system is the only safety net that stands between living out one’s retirement years in poverty.

Coming soon: Review of current proposals by the government to fix the Social Security funding problem.

The opinion expressed in this column is that of the writer and does not necessarily reflect the opinion of the Editorial Board, the Bulletin, or the Allegheny County Medical Society.

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Congratulations to all of our Awardees from Allegheny County

PAMED received over 200 nominations recognizing physicians for their hard work not only through the COVID-19 pandemic but day-in and day-out.

PAMED celebrated its first ever state-wide recognition of Doctors’ Day. PAMED staff and leaders visited a few nominated physicians in different parts of the state for an in-person presentation of their gift from generous sponsors!

Thank you to everyone who took time to nominate a colleague or physician.

Phillip Adams, D.O. John Brehm, M.D. Thomas Campbell, M.D. Douglas Clough, M.D. Melissa Dosch, D.O. Salman Fazal, M.D. Louis Heyl, M.D. Micah Jacobs, M.D. Ramzi Khalil, M.D. Akhtar Khan, M.D. David Lasorda, M.D. David Logan, M.D. Matthew Macken, M.D. Timothy Martin, M.D. Hemlata Moturi, M.D. Charles Mount, M.D. David Nace, M.D. Deval Paranjpe, M.D. Mohan Paranjpe, M.D. Amy Pare, M.D. Raymond Pontzer, M.D. Asha Potnis, M.D. Andrew Sahud, M.D. Amir Toussi, M.D. Shaka Walker, M.D. Jonathan Weinkle, M.D. Nicole Wheeler, M.D. Don Yealy, M.D.

Recognizing Hard Working Physicians