Projections are that Social Security payments will not rise for the next two years, as the calculations for COLA are coming out negative.
Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise. The trustees who oversee Social Security are projecting there won’t be a cost of living adjustment (COLA) for the next two years. That hasn’t happened since automatic increases were adopted in 1975.
By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.
What surprised me a little were the huge numbers of people in the programs. I guess I knew, but seeing the numbers is a little shocking.
About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982.
More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the Social Security Administration.
Millions of people with Medicare Part B coverage for doctors’ visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients.
There is no such hold-harmless provision for drug premiums.
Oh, and rules notwithstanding, they would like more money.
Kennelly’s group wants Congress to increase Social Security benefits next year, even though the formula doesn’t call for it. She would like to see either a 1 percent increase in monthly payments or a one-time payment of $150.
The cost of a one-time payment, a little less than $8 billion, could be covered by increasing the amount of income subjected to Social Security taxes, Kennelly said. Workers only pay Social Security taxes on the first $106,800 of income, a limit that rises each year with the average national wage.
But the limit only increases if monthly benefits increase.
And the money quote, and the theme of the post:
Consumer prices are down from 2008 levels, giving Social Security recipients more purchasing power, even if their benefits stay the same, said Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a Washington think tank.
“Seniors may perceive that they are being hurt because there is no COLA, but they are in fact not getting hurt,” Biggs said. “Congress has to be able to tell people they are not getting everything they want.”
I don’t understand how so many people have missed the lessons of the past (and not to distant past, either). If you are relying on the government to take care of you, expect to be disappointed. How did we get to this place where so many people rely on the government? What happened to the idea that it was embarrassing to have to take a handout?
Yeah, I know Social Security isn’t exactly a handout, that we’ve ‘paid in’ to a system and are due our money back. But really, who expects that to be true any longer? Now Social Security is simply a redistribution scheme that’s running out of money. If you are under the age of 40, you better be planning on something else when you retire.
But maybe that’s not a bad thing. Maybe we’d be better off with a little less entitlement to other people’s money; maybe we’d learn to rely on ourselves instead of our government to take care of us.