As AARP New Mexico’s state director, I feel compelled to respond to the piece by Amber Wallin of New Mexico Voices for Children (“Social Security benefits are mostly untaxed,” Feb. 18).
Pitting generations against each other serves no one, especially when we are talking about the two most vulnerable populations in our state. We cannot fund children’s programs on the backs of older New Mexicans living on fixed incomes. AARP New Mexico believes our state can and should look for opportunities to help all of our residents, especially the most vulnerable, achieve health and financial security.
New Mexico is one of the very few states that still taxes Social Security benefits to the full extent allowed under federal law. Because these taxation thresholds have not been raised in 30 years, they are not providing the same level of relief they did when first instituted in the 1980s. As a result, too many of New Mexico’s middle-income retirees are paying taxes on their Social Security benefits.
When you are retired, it’s tough to increase your income. Annual cost-of-living adjustments — when they happen at all — don’t keep up with the rising costs of health care, utilities and other consumer goods. The average Social Security benefit for people in New Mexico is about $14,000 a year. According to a report by Think New Mexico, Social Security is the sole source of income for 1 in 3 New Mexico seniors. The report states the annual cost of food, housing and health care for older Americans is $28,000 per year. That’s double what many on Social Security receive. At the same time, the cost-of-living adjustment in 2020 was just 1.6 percent, or an additional $24 a month on average, hardly enough to cover everyday cost increases.
Moreover, 25 percent of New Mexico residents stopped taking medication as prescribed due to cost. Many retirees tell AARP they are using their Social Security to help care for their own parents, their spouses and, more and more often, are taking on the financial challenge of raising or helping care for their grandchildren. Currently, there are about 26,000 grandparents raising 51,000 grandchildren in New Mexico. These older residents provided $3.4 billion in unpaid child caregiving in 2018.
Targeted Social Security tax relief is one way our state can help retirees stretch their hard-earned dollars.
Within our state, people age 50 and older create an economic impact much greater than their portion of the population, generating 39 percent of the state’s gross domestic product in 2018, totaling $45 billion. Any assistance provided to this demographic is put almost immediately back into the economy through goods and services, taxes and job creation.
Social Security tax relief is a matter of fairness for low- and middle-income retirees, and it is an investment in the financial security of New Mexico for years to come. New Mexico’s elected officials should not miss the chance to help protect our seniors and their families.