Published in Woonsocket Call on October 23, 2016
On Tuesday, September 18, the U.S. Social Security Administration announced that the nation’s 65 million Social Security beneficiaries will be automatically be paid a minuscule 0.3 percent cost-of-living adjustment (COLA) to their monthly checks in 2017. The average monthly Social Security benefit next year will be $1,360, $5 more than now.
According to AARP, 153,349 Rhode Islanders received Social Security checks as of the end of 2014. Also, 22 percent of Rhode Island retirees depend on their Social Security check for 90 percent or more of their income. That’s chump change, not a lot of money for Rhode Island retirees to buy groceries, gas, or even catch up on their bills.
The federal agency detailed other changes that we can expect, too. Beginning in 2017, the amount of your earnings subject to the Social Security tax increases from $118,500 to $127,200. It’s estimated that this tax change impacts about 12 million of the 173 million people who pay into the retirement system.
Next year’s Social Security COLA increase is the smallest in a decade and comes after no increase in 2016 (zero increases also occurred in 2010 and 2011). Seventy percent of Medicare beneficiaries are protected by a hold-harmless rule, which keeps Social Security benefit payments from decreasing because of increased Medicare Part B premiums. However, 30 percent of Medicare beneficiaries (including high wage earners, those enrolled in Medicare and not yet receiving Social Security, and newly enrolled in Medicare) could see cost increases in their Medicare Part B premiums that cover their visits to doctors and hospitals. The increased premium costs will be deducted directly from their Social Security check.
Chump Change COLA Won’t Pay Bills
Responding to the federal government’s disappointing COLA announcement, AARP CEO Jo Ann Jenkins, whose Washington, DC aging group represents 37 million members, charges in a statement that one major domestic issue ignored by presidential debate moderators and one that demands attention from candidates is the future of Social Security.
“Over the last five years, Social Security COLA’s have remained small or nonexistent at 1,7 percent or lower, even though every cent can matter to beneficiaries and their families. After last year’s zero COLA, this year’s announcement doesn’t offer much help to the millions of families who depend on their Social Security benefits. As prescription prices skyrocket and Medicare premiums and other health costs increase, many older Americans have understandable concerns. Along with many groups, AARP has also asked Congress to ensure that Medicare premiums and deductibles don’t skyrocket next year,” says Jenkins.
Adds Max Richtman, President/CEO of the National Committee to Preserve Social Security and Medicare (NCPSSM), “No one can say with a straight face that providing the average senior with an additional four dollars a month will come even close to covering the true cost of living that retirees face. The average senior spends more than $5,000 a year on healthcare costs alone. A $4 Social Security COLA doesn’t even make a dent in covering rising costs for seniors.”
Richtman asserts that next year’s tiny COLA increase only continues the trend of historically low cost-of-living adjustments for retirees. “Over the past eight years, the current COLA formula has led to average increases of just over 1%, with three of those years seeing no increase at all. For the average senior, the 2017 COLA will mean an extra $4.00 per month which would barely cover the average cost of one Lipitor pill, a prescription drug frequently prescribed to seniors,” he says.
Richtman notes, “I’ve asked seniors at town hall meetings around the country how many of them think the COLA represents their true cost of living — laughter is always the response. We should move to a COLA formula that takes a more accurate measure of seniors’ expenses, which is a CPI for the elderly. The CPI-E has been in the experimental phase since 1982. It’s time to finish the job by fully funding the development of a more accurate COLA formula.”
Congress Must Legislatively Fix COLA Formula
In media releases, Rhode Island lawmakers call for tweaking how Social Security calculates Social Security COLAs.
Democratic U.S. Senator Sheldon Whitehouse, who sits on the U.S. Senate Special Committee on Aging, calls next year’s Social Security COLA increase an “insult.” He says, “For the fifth year in a row, Washington’s outdated formula has resulted in zero or next to zero cost of living adjustment for Social Security benefits. For the fifth year in a row, Rhode Island seniors will have to stretch their budgets to cover the rising cost of the basics, like food, housing, bills, and prescriptions. They didn’t bargain for this when they paid into Social Security over a lifetime of hard work. Congress needs to change the way we calculate Social Security COLAs.”
Adds, Rep. David Cicilline (D-RI), “This is completely unacceptable. The method for calculating cost of living adjustments is completely broken and fails to reflect the costs of gods and services seniors buy in Rhode Island and across the country.”
The Rhode Island Congressman calls for the Republican House Leadership to seriously consider pending legislation that will ensure that cost of living adjustments reflect the goods and services Rhode Island seniors actually buy. “Speaker Ryan should immediately bring the Protecting and Preserving Social Security Act to the floor so we can replace this outdated method for calculating cost of living adjustments with a model that actually meets the needs of Rhode Island seniors,” said Cicilline.
During the last Congress, the Senate and House controlled GOP have consistently kept legislative proposals from being considered that were crafted to bring needed reforms to the nation’s Social Security and Medicare programs. A newly elected Democratic President and a Congress controlled by Democrats might just be the political fix necessary to finally do the job that is ensuring the financial long-term solvency of these two domestic entitlement programs