RICARDO ALONSO-ZALDIVAR and CHRISTOPHER RUGBER
WASHINGTON (AP) – Millions of social security retirees will receive 5.9% more benefits by 2022. The biggest cost of living adjustment in 39 years has followed a spike in inflation as the economy struggles to get rid of the coronavirus. pandemic.
The Social Security Administration estimated on Wednesday that COLA, as it is commonly called, makes an additional $ 92 a month for the average retiree. This is a sharp break in a long lull in inflation, with cost-of-living adjustments averaging just 1.65% per year over the past 10 years.
Adjusted for the increase, the estimated average social security payout for a retired worker next year is $ 1,657 per month. The typical couple’s benefit will rise by $ 154 to $ 2,753 per month.
But this is only to offset the rising costs that recipients are already paying for food, gasoline and other goods and services.
“It’s happening pretty quickly,” retired Cliff Ramsey said of the rise in the cost of living. After a sales career with a leading steel manufacturer, Ramsey lives near Hilton Head Island, South Carolina. At home, he takes care of his nearly 60-year-old wife Judy, who has advanced Alzheimer’s. In the aftermath of the coronavirus pandemic, Ramsey said he also noted an increase in the price of wages paid to his caregivers, as well as personal care products for Judy.
COLA affects the household budget of about one in five Americans. This includes social security recipients, disabled veterans and federal retirees, about 70 million in total. For baby boomers who have retired in the past 15 years, this will be the biggest growth they have seen.
Among them is Kitty Ruderman from Queens in New York, who retired from her career as an executive assistant and has been in social insurance for about 10 years. “Every year we wait to see what the growth will be, and every year it has been so small,” she said. “This year, thank God, everything will change.”
Ruderman says she takes time to shop at grocery stores to take advantage of midweek senior discounts, but even so, the price increases were “extreme.” She says she does not think she can afford the drugs recommended by her doctor.
AARP CEO Jo Ann Jenkins called the increase in government benefits “critical for welfare recipients and their families as they struggle to keep up with rising spending.”
Policymakers say the adjustment is a guarantee to protect social security benefits from a loss of purchasing power, not an increase in the wages of retirees. About half of older people live in households where social security provides at least 50% of their income, and a quarter of the population rely entirely or almost entirely on monthly payments.
“You never want to play down the importance of COLA,” said retirement policy expert Charles Blouse, a former public trustee who helps oversee social security and health care finances. “What people can buy depends very much on the quantity that comes out. In many cases we are talking about the necessities of life. “
A report by Social Security trustees this year strengthened warnings about the program’s long-term financial stability. But little has been said in Congress about the fix, as lawmakers are obsessed with President Joe Biden’s massive domestic legislation and party machinations over public debt. Social security cannot be solved through the budget negotiation process that Democrats are trying to use to fulfill Biden’s promises.
It will be Social Security’s turn, said Rep. John Larson, a Connecticut doctor, chair of the House Social Security subcommittee and author of legislation to address the deficiencies that would prevent the program from paying full benefits in less than 15 years. His bill will raise payroll taxes as well as change the COLA formula to give more weight to health care and other spending that affects older people more. Larson said he intends to move forward next year.
“This one-shot COLA shot is not an antidote,” he said.
While Biden’s domestic package includes a significant expansion of Medicare to cover dental care, hearing, and vision, Larson said he hears from voters that seniors feel neglected by Democrats.
“The town halls and telegrams say:“ We are very pleased with what you did with the child tax credit, but what about us? “” – added Larson. “This is a very important constituency in the midterm elections.”
COLA is only part of the annual financial equation for seniors. A premium for Medicare Part B, which they pay for outpatient care, is expected to be announced soon. This is usually a boost, so at least a portion of any welfare boost is eaten up by health care. The Part B premium is now $ 148.50 a month, with Medicare Trustees forecasting a $ 10 increase in 2022.
Economist Marilyn Moon, who also served as a public trustee for welfare and health care, said she believed the current surge in inflation would be temporary due to highly unusual economic circumstances.
“I think there will be growth this year that you won’t see in the future,” Moon said.
But policymakers should not postpone starting work on retirement programs, she said.
“We live in a time where people don’t respond to political needs until they feel desperate, and Social Security and Medicare are programs that benefit from long-term planning, not short-term machinations,” she said. …
Social security is funded through payroll taxes levied on workers and their employers. Each pays 6.2% of wages up to a cap that is adjusted annually for inflation. Next year, the maximum payroll taxable earnings in Social Security will increase to $ 147,000.
The funding scheme dates back to the 1930s and is the brainchild of President Franklin D. Roosevelt, who believed that a payroll tax would encourage average Americans to develop a sense of ownership that would protect the program from political interference.
This argument still resonates. “Social security is my lifeline,” said Ruderman, a retired New Yorker. “This is what we worked for.”