A new AARP Public Policy Institute study says Social Security dollars nearly double when spent in the islands.

The report, released this week, says every $1 in Social Security distributed in the state generates about $1.87 worth of economic activity.

The average Social Security payment in Hawaii is about $1,175 a month, said Steven Tam, AARP Hawaii director of advocacy. Among other statistics about senior citizens AARP tracks, 87 percent of Hawaii’s older residents received Social Security benefits, and a large portion of those recipients rely on the federal payment for 90 percent or more of their annual income.

They use those funds for “food services, health care and retail,” Tam said. “It’s jobs that really are vital to the economy. People that get the Social Security benefits, they’re not putting this money away and saving it for a rainy day. They need to spend it right away.”

About 240,000 people in Hawaii receive benefits. The beneficiaries aren’t just retirees, but also their spouses, survivors and people with disabilities, Tam said.

The program is so important to people that Tam has heard from a number of Hawaii seniors, AARP members and the general public who are especially worried about the impact of the recent federal budget stalemate and a possible government default.

“They just don’t have any other source of income right now,” Tam said, adding they are concerned that federal officials will try to address the country’s budget and deficit issues “on the backs of” people who depend on Social Security.

AARP has done outreach with the community, trying to impart the importance of saving before they reach retirement age and not relying on Social Security to pay the bills, Tam said.

“Because of the cost of living right now, people are unable to put away any money,” he added. “Social Security becomes what they live on.”

It also becomes what other people here live on. The AARP study said the $3.3 billion paid in benefits to Hawaii residents in 2012 generated about $5.7 billion in total economic output in Hawaii. The benefits also helped Hawaii residents keep or find more than 37,000 jobs, the report said.

Someone receiving Social Security spends money at a grocery store buying goods. Not only does the store make money, so do the vendors, delivery drivers and other companies the grocery store buys goods and services from. That’s how the money multiplies, Tam said.

Nationally, Social Security benefit payments last year supported more than $370 billion in salaries, wages and compensation for workers across the country, the AARP study said. When the multiplier effect is factored in, officials said, that came to $1.4 trillion in economic benefit to the country.

By Erin Miller – West Hawaii Today – emiller@westhawaiitoday.com