What To Do If Social Security Checks Are Stopped
It's been said by some people (e.g., former Senator Judd Gregg, R-NH) that the Republicans in Congress aren't likely to pass any debt ceiling bill until a few social security checks are missed.
"My gut tells me that we'll need a weekend of drama — maybe a weekend of the government not paying its bills — politicians need drama to make something happen. As soon as social security checks don't go out, the politics will change. I suspect it'll take artificial drama to get closure past the House." "Boehner understands that a shutdown is bad for his caucus and that there's something viable short of a shutdown but right now... it's a 50-50 chance that we go into a few days of disruption."
You know I think Judd Gregg may be right. Which led me to ponder about what people who don't get their social security income (SSI) checks in August might have to do. Oh, I don't mean the well-off, the billionaires and millionaires. To them SSI is just a little bonus. No, I mean those people who rely heavily on their SSI or SSDI check from the government to pay the bills, buy food, etc.
Let me say for starters that I have a direct stake in this discussion. Our family's major source of income is social security disability (SSDI) my wife receives because she had pancreatic cancer and, as a result of treatment became a brittle diabetic and suffered severe loss of her cognitive functioning due to the chemotherapy drug used during her radiation treatment). You can read about her story here. I am also disabled by a rare autoimmune disorder, TRAPS, but my ERISA benefit plan's disability trustee (Liberty Mutual Insurance) denied me benefits and that denial was upheld by the federal district court because a doctor I never met hired by the insurance company reviewed my medical files and determined I was not disabled (you can read about my story here). I was told after the lawsuit ended the way it did not to bother filing for SSDI as there was little chance I would be approved.
So, if the government stops sending out Social Security Checks in August (and you know they aren't going to suddenly stop paying interest on the T-Bills or end the wars in the Middle East) what's a social security beneficiary to do when the checks stop coming?
1. Retirement Savings. First off, for those of you who have IRA's or money in a 401-K plan, you might be tempted to cash in some of whatever investments you have. One big problem with that though: the stock and bond markets are likely to drop precipitously. So, if like most people, your money is tied up in mutual funds for stocks and/or bonds you'd be seriously depleting your savings because you would be selling at a loss. What's more, if you are disabled and receiving SSDI, any money taken out of your IRA or 401-K could be hit with a significant tax penalty for making early withdrawals. So consider those funds a last resort.
2. Home Equity Loans. If you have a home, you might consider taking out a home equity loan. Problem is, if you don't already have an existing home equity line, there is no assurance your bank would grant you one. And in any event, many of you my have no equity in your homes, or you may have already lost your home to foreclosure. Still, this might be a possibility for a few people. Just remember though that you have to pay back that loan with interest, and who knows what the interest rates are going to look like after Aug 2nd rolls around.
3. Life Insurance. Do you have whole life insurance policy (i.e., one that has cash value in it)? Well for those of you who do, you have two options: a) cash in all or a part of your policy, or b) take out a loan against your policy. Most whole life policies allow both options. However, if you cash in your policy, the proceeds will be taxed as ordinary income to you and your heirs would receive less money (or none at all if you cash out the policy entirely). As for taking out a loan, you will have to pay that loan back with interest also, usually at a designated interest rate. Still, might be something to consider if you have whole life insurance.
Well so much for the people who have savings or the means to take out a loan. What if you don't have those options available to you? Well, here's a few more thoughts.
4. Luxuries. Cancel any "luxury" items. What do I mean by that term? Well, here's a few things that you don't absolutely have to have if your check stops coming:
- Basic Cable or Satellite TV (just make sure there is no cancellation fee)
- Cell phones (same qualification re: cancellation fees).
- The Internet (check for cancellation fees though)
- Newspaper and magazine subscriptions
- Eating out (includes, fast food, takeout or pizza delivery)
- New Clothes
- Fresh Food (you can live on generic oatmeal, pasta and canned veggies)
- New Books, DVD's, CD's, Video games, etc. (go to your local library instead)
No doubt you can think of a few more.
5. Electrical Usage. Eliminate all but essential uses of electricity. Turn off your lights, unplug unused devices, hand wash dishes, eat more cold meals (welcome back PB&J sandwiches), don't wash clothes as often, and unless you must need your ac or fans to survive, don't run them. If you do (and sadly that accounts for a lot of people during this current heat wave) run the ac at the highest temperature setting you can endure (80 degrees F?) without falling victim to heat stroke.
6. Food. I've already mentioned food a lot, but let's get down to the nitty-gritty. Don't buy bottled water, soda, sports drinks, juices, milk or pre-made tea. Tap water is your friend. Buy only generic items. Generic cereal, generic yogurt, generic toilet paper, etc. Check with your local food bank to see if you qualify for their assistance. I'll bet a lot of you will. Buy day old bread, bagels etc. Much cheaper. Oh and no candy bars. No beer, wine or other alcohol. Obviously, if you are a diabetic you have to maintain your blood sugar levels so I'd chat with your doctor about what food you should have and what you can do without.
7. Family. You have any well off children or other relatives? If so, give them a call and ask for help. It may be demeaning, you may feel ashamed, but remember it is better to swallow a little pride than starve. After all, you paid into social security for many years and it would be the government that would be taking away the money due you. It would not be your fault if the Republicans in the House can't get their act together.
8. Sell Some Stuff. Now might be a good time to de-clutter your home. Hold a garage sale. Sell your second car or second TV if you have one. Are you on e-bay? Might be a good time to sell anything of value that you can live without. Real silverware, for example. Expensive fur coats (yes, some people do have them). Do you have a lot of jewelry you never wear? See if anyone would be interested in buying it, and as for gold, well, if you have gold chains, diamonds or other jewels find the jewelry store in town that's paying the highest price for such items and take the bus to their store. Why take the bus? Well that leads me to my next idea ...
9. Drive Your Car as Little as Possible. Gasoline is expensive. If you can, arrange car-pools for grocery shopping with your neighbors and friends. More importantly, check out your public transport options: Buses, light rail, whatever. Maybe there is an inexpensive bus line near your home that runs to all the places you have to go.
10. Medications. Hopefully, Medicare payments won't be cut off. Yet, even if they aren't, you should find out from your doctor which drugs you can go without for a month or so, because even with Medicare you still have a make co-pay for your prescriptions. Also ask if your doctor has any samples of meds you take that he obtained from drug manufacturers, and ask if he can provide you some. Never hurts to ask.
So that's a few ideas to consider should the worst come to worst, i.e., no debt ceiling compromise bill is passed by August 2nd and the federal government "defers" payments of your SSI or SSDI checks. I'm sure you can think of many other, possibly better ideas, to help get you through the loss of your social security income. The most important thing, though, is to have a plan in place, as soon as possible. Don't wait until the last minute to see if the House Republicans cave and make a deal with Obama, the Senate and House Democrats. By that time it may be too late.