The Social Security Administration recently announced that there would be no Cost-of-Living Adjustment (COLA) increase for next year. The news is causing big worries for more than 70 million Social Security retirees and recipients of COLA adjusted benefits.
Sixty-nine year old Carol Mead of Montrose, Pennsylvania, recently contacted TSCL to voice concerns about Social Security. At age 70 Carol’s husband Glen, a retired dairy farmer, is still working in a stone quarry, but Carol worries that with both knees giving him pain he wouldn’t be able to do that type of work much longer. The couple still relies on his income from his job.
Carol says one of their biggest problems is healthcare and wonders how they will pay for Medicare premiums and medications. Like many people 65 and over, Carol takes four prescriptions — one of which costs her $89 a month.
The recent announcement of no COLA in 2016 is the third time in only seven years that there hasn’t been any annual boost. Prior to 2010, COLAs have been paid annually, since 1975. Since 2010, COLAs have been at record lows, averaging just 1.4% from 2010 to 2015 —less than half the 3% more commonly seen in the decade prior to 2010.
Over the same period, however, retirees have continued to report big increases in their real costs. A survey conducted by TSCL earlier this year found that 87 percent of respondents said the 2015 COLA raised their benefits by less than $29 a month. Yet 90 percent of the survey participants reported that their real monthly expenses had increased by more than $39 a month over the past 12 months. A study by TSCL has found that Social Security benefits have lost about 22 percent of their buying power since 2000.
Not only do low COLAs wreak havoc with retirees’ household budgets, the lack of COLA growth is striking a serious blow to overall Social Security income — especially for people who have been receiving benefits over the past seven years or longer. According to a new analysis for TSCL, people who retired in 2009 or before with an average benefit of about $1,000 per month will receive a benefit that’s about $153 a month lower in 2016, than if COLAs had been the more typical 3 percent.
TSCL is urging Members of Congress to provide an emergency COLA and Medicare premium relief for 2016. The organization is working for this legislation that would provide a more fair and accurate COLA and benefit boost by using a seniors’ consumer price index to calculate the boost.