“It’s going pretty fast,” said retiree Cliff Rumsey of the cost of living increases he’s seen. After a career in sales for a major steel maker, Rumsey lives near Hilton Head Island, South Carolina. He has been caring for his wife, Judy, who has advanced Alzheimer’s disease at home for almost 60 years. Since the coronavirus pandemic, Rumsey said he has noted increases in food prices, salaries paid to caregivers who occasionally spell it out, and personal care products for Judy, not to mention energy costs.
COLA affects household budgets for about 1 in 5 Americans. That includes Social Security recipients, disabled veterans, and federal retirees – nearly 70 million people in all. For baby boomers who retired in the past 15 years, this will be the biggest increase they’ve seen.
“It will be welcome,” said analyst Mary Johnson of the non-partisan Senior Citizens League advocacy group. “But what we are hearing is that even with COLA, purchasing power will still be eroded as price increases continue to rise.”
Policymakers say COLA was designed as a guarantee to protect social security benefits against loss of purchasing power in an ever-changing economy, not as a pay rise for retirees. About half of older people live in households where social security benefits provide at least 50 percent of their income, and a quarter depend on their monthly payment for all or almost all of their income.
“No matter how big the COLA is, you never want to downplay the importance of the COLA,” said retirement policy expert Charles Blahous, a former public trustee helping to oversee Social Security and Social Security finances. Health Insurance. “What people can buy is very deeply affected by the number that comes out. We are talking about the necessities of life in many cases.
This year’s Social Security administrators are reporting amplified warnings about the program’s long-term financial stability, but little is said about fixes in Congress as lawmakers’ attention is absorbed by President Joe Biden’s massive legislation on the program. national agenda and partisan machinations over the national debt. Social Security cannot be dealt with by the budget reconciliation process Democrats are trying to use to keep Biden’s promises.
But Social Security’s turn will come, said Rep. John Larson, D-Conn., Chairman of the House Social Security subcommittee and author of legislation to tackle looming deficits that would prevent the program from falling. pay all benefits in less than 15 years. His bill would increase payroll taxes while changing the COLA formula to put more weight on health care spending and other costs that weigh more heavily on seniors. Larson has said he intends to move forward next year.
“This one-off shot from COLA is not the antidote,” he said.
Although Biden’s national plan includes a major Medicare extension to cover dental, hearing and vision care, Larson said he heard from voters that seniors feel neglected by Democrats.
“In town halls and city tele-hotels, they say: ‘We are really happy with what you have done on the child tax credit, but what about us? “” Larson added. “In a midterm election, this is a very important constituency.”
COLA is only part of the annual financial equation for seniors. An announcement regarding Medicare’s Part B premium for outpatient care is expected shortly. It’s usually an increase, so at least part of any social security increase goes to health care. The Part B premium is now $ 148.50 per month, and the Medicare Administrators report estimated an increase of $ 10 for 2022.
Economist Marilyn Moon, who also served as a public administrator for Social Security and Medicare, said she believed the current inflationary surge was an adjustment to very unusual economic circumstances and that the restriction model prices will reaffirm over time.
“I think there will be an increase this year that you won’t see happening again in the future,” Moon said.
It shouldn’t be long before policymakers get down to work on retirement programs.
“We are at a time when people do not respond to political needs until there is a sense of hopelessness, and Social Security and Medicare are programs that benefit from long planning. term rather than short-term machinations, ”she said. .