Social Security COLA Hike is a Mixed-blessing for Seniors

2017-07-10T16:23:54+00:00October 20th, 2011|Max Richtman, Social Security|

Healthcare Costs Will Erode COLA increaseThe Social Security Administration has announced a 3.6% increase in the annual Cost of Living Adjustments, or COLAs, for Social Security beneficiaries in 2012. The COLA increase will take effect January 1 and is welcome news for beneficiaries who have not seen a cost of living increase since 2009.The 3.6% increase adds about $43 to the average retired worker?s Social Security check of $1,186. However, premium costs for Medicare Part B coverage are expected to rise, potentially by double-digits, eating away at much of this cost of living increase. The Medicare premium announcement is expected later this month.?$43 may not sound like much but for millions of American seniors already suffering in this economy and facing years of rising costs, shrinking returns on their savings and no cost of living increases, today?s COLA announcement lets them know there?s some relief around the corner. It may be cold comfort, however, once they see just how high next year?s Medicare premiums will go. While healthcare costs continue to erode seniors? ability to keep up with inflation, Congress has yet to adopt a COLA formula that reflects the spending habits of seniors, like the CPI-E. At the same time, the Congressional Super Committee is reportedly considering another formula that would make a flawed formula even worse as COLA?s for beneficiaries would continue to fall even further behind the true costs of living they face each and every day.? Max Richtman, President/CEOSwitching to a Chained-CPI will permanently cut COLAs for generations of retirees and the disabled – making it harder and harder for them to make ends meet. The Social Security Actuary reports that over time the annual benefit cut will total almost $1,400.The National Committee agrees it is critical that the COLA be calculated based on an accurate formula. But if accuracy is really the goal, Congress should change the COLA formula to factor in the large health care expenses most seniors face. Adopting a formula that cuts already modest benefits for generations of retirees is not fiscal responsibility.There were a number of good articles today on the COLA and Medicare premiums for 2012. Here are a couple from the Associated Press and Los Angeles Times .