By Mary Johnson, Editor
Don't expect much growth in Social Security benefits next year. According to consumer price index data, Social Security and other adjusted benefit payments will probably stay pretty flat. With the Social Security Administration getting ready to announce the 2014 cost-of-living-adjustment (COLA) on October 16th, the COLA looks like it will be in the vicinity of 1.7%. That would raise average monthly benefits of $1,157 by just $19.70.
While that is certainly better than 2010 and 2011 when inflation was so low that no COLA was paid for two years in a row, it's unlikely to cover seniors' real cost increases. Earlier this year we surveyed our readers and 89% reported that the 1.7% COLA in 2013 increased benefits by less than $29 per month. On the other hand, almost the same number, 88%, reported that their total monthly expenses rose by more than $39. Unfortunately the majority of those people, 40%, said that their monthly costs rose by more than $119.
This discrepancy between COLAs and real costs is squeezing senior households. Retirees are forced to draw down savings faster than planned, and work far longer than anyone ever imagined. In addition, the percentage of households with credit card debt headed by someone age 75 or older has doubled from 11 percent in 1998 to 22 percent in 2010 according to recent data from the Employee Benefit Research Institute. The sad fact is that people 65 and older are the fastest-growing segment of the U.S. population filing for bankruptcy. Seniors are getting deep into debt because of high medical bills, long-term care costs, and dwindling retirement savings.
Yet incredibly, despite the grim statistics, members of both parties are seeking common ground on deficit reduction, and COLAs remain the target of cuts. TSCL is fighting back and plans to deliver thousands of petitions protesting the cuts later this year.
To learn how much the COLA cuts would cost you, try TSCL's "chained" COLA calculator.
Sources: "Dying With Debt: The Hidden Financial Crisis," Steve Yoder, The Fiscal Times, June 12, 2013