For just the third time in 40 years, millions of Social Security recipients, disabled veterans and federal retirees can expect no increase in their benefits next year.
This unwelcome news for more than one-fifth of the nation’s population could get even worse, as those on Medicare could see their monthly checks actually decline.
By law, the annual cost-of-living adjustment for Social Security, or COLA, is based on a government measure of inflation, which is being dragged down by lower prices at the gas pump.
The government is scheduled to announce the COLA — or lack of one — on Thursday, when it releases the Consumer Price Index for September. Inflation has been so low this year that economists say there is little chance the September numbers will produce a benefit increase for next year.
While prices for things like food and rent haven’t gone down, the average prices according to COLA have technically dropped from a year ago. That’s because gas prices have plummeted.
So now everyone’s check will likely buy them less, except when they’re at the gas station.
“It’s a very high probability that it will be zero,” said economist Polina Vlasenko, a research fellow at the American Institute for Economic Research. “Other prices — other than energy — would have to jump. It would have to be a very sizable increase that would be visible, and I don’t think that’s happened.”
Congress enacted automatic increases for Social Security beneficiaries in 1975, when inflation was high and there was a lot of pressure to regularly raise benefits. Since then, increases have averaged 4 percent a year.
Only twice before have there been no increases.
In all, the COLA affects payments to more than 70 million Americans.
Carol Mead of Montrose, Pennsylvania, said she and her husband were counting on Social Security COLA to help them with their finances.
“My husband is working just so we can pay our bills,” said Mead, a retired land-use administrator. “He’s 70 years old, and he’s still working in a stone quarry. He’s told me a number of times that he thinks he’s going to have to work until the day he dies.”
More bad news: The lack of a COLA means that seniors could face higher health care costs.
Most have their Medicare Part B premiums for outpatient care deducted directly from their Social Security payments, and the annual cost-of-living increase is usually enough to cover any rise in premiums. When that doesn’t happen, a long-standing federal “hold harmless” law protects the majority of beneficiaries from having their Social Security payments reduced.
But that leaves about 30 percent of Medicare beneficiaries on the hook for a premium increase that otherwise would be spread among all. Those who would pay the higher premiums include 2.8 million new beneficiaries, 1.6 million whose premiums aren’t deducted from their Social Security payments and 3.1 million people with higher incomes.
Their premiums could jump by about $54 a month, or 50 percent. Those with higher incomes would pay even larger amounts.
States also would feel a budget impact because they pay part of the Medicare premium for about 10 million low-income beneficiaries.
All beneficiaries would see their Part B annual deductible for outpatient care jump by $76, to an estimated $223. The deductible is the annual amount patients pay before Medicare kicks in.
“This would affect all beneficiaries,” said Tricia Neuman of the nonpartisan Kaiser Family Foundation. “This kind of an increase is unprecedented.”
The COLA is calculated by comparing consumer prices in July, August and September each year with prices in the same three months from the previous year. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.
The numbers for July and August show that, overall, consumer prices have fallen since last year. Fuel prices are down by 23 percent from a year ago, according to the August inflation report. But prices for some other goods and services, such as health care and housing, are up.
Advocates argue that the government’s measure of inflation doesn’t accurately reflect price increases in the goods and services that older Americans use.
“The COLA is determined by the buying power of younger working adults,” said Mary Johnson of The Senior Citizens League.
Many advocates for seniors want Congress to adopt an experimental price index that seeks to capture the inflation experienced by Americans 62 and older. The Social Security Administration estimates it would increase the annual COLA by an average of 0.2 percentage points — which still might not be enough to generate a COLA for next year.
Lee Marshall of Greenville, California, said the current inflation index isn’t good enough.
“They have a formula that they use that doesn’t reflect the actual cost of living,” said Marshall, 68, a retired laborer and casino dealer. “Just because the price of gas is going down, that doesn’t mean anything.”
The Associated Press contributed to this story
The government has a way of tinkering with COLA calculations to suit its political means. The formula changes regularly and the COLA often bears little resemblance to reality.
We are now facing the results of poor political choices made for the past few decades. Social Security has been expanded by politicians seeking to use it for their own political gain. Thanks to the government’s deficit spending, the interest rates have been driven to near zero to keep the nation from going bankrupt. President Obama’s health care reforms have exacerbated many of health care price increases. Our nation’s future is bleak due to the general incompetence and corruption of the clowns we sent to Washington. Anyone counting on social security better prepare to live out their “golden years” as frugally as possible.
Here’s a novel idea, let’s limit congressional pay raises to the same COLA the use for Social Security. Then maybe we can really help our seniors thrive.
Amen Steve says. And they are totally keeping up the illegal’s in the Country who have never paid in a dime – free everything. Certainly they are not leaving when they do so well here. Why should they? I think the House and Senate should pay their own insurance, not get a pension after serving only one term, bring their salaries in line with us peons, and cancel all those planes that they use. Nancy Pelosi could not do with a small plane and got a 4-seater. Why can’t they fly commercial? All these perks are costing us a fortune. We should not have to pay Mr. Obama for all the family vacations, etc. He is a salary.
My company recently dropped the retires from their health plan, and “helped us find other insurance” of course at higher premiums. I have been on that insurance since I hired in 40 years ago. I had 3 prescriptions that were name brands as they work better for me. One that I HAVE to take a generic brand as my part was going to be $1062.00 every 3 months. My retirement check is not that much. When I was with the company policy after all those years, I did not pay that much annually. After a lawsuit (I think) they did take back some of the retirees. However, those over 65 have to stay on this new policy. Isn’t that age discrrimination???
I notice that payments to illegal aliens isn’t one of the options even considered to save money. Considering that since the democrat congress and the democrat president Johnson took the money from the Social Security fund and placed in the general fund so they could spend it, and now owe SS billions of dollars, I can not see where these can be called entitlements. Workers paid into SS in good faith, although they were forced to, and now the government through miss management and illegal give a ways is trashing the retirement that many seniors depend on for their very existence. An illegal alien that has never contributed a penny to SS can sneak across the border and apply for SS, Medicaid, subsidized housing, and food stamps. The obama administration claims they are needed to do the work that Americans won’t do. Yet in California, the farmers in the state with the most illegals per capita can’t get them to work the fields. The solution according to the government is to let more in. That only makes sense to a politician, the ones who check their brains at the city limits when they get to DC. If the money that is being paid to them was to be put into the economy to boost the salaries of American workers instead of given to illegals, the Americans could afford to work. Now it is more profitable to sit on your duff, have kids and let the government pay you to breed. Only problem with that is the money is running out. Then the chair jockeys will want what you own, and will feel that they have the right to take it because they have been told they deserve it. in this life, you should get what you work for unless you are physically or mentally disabled.
The cost of living has not gone up bullcrap. Ask any one who has bought groceries or medication in the past year. Only the congress and the president and his cronies have not had to tighten their belts, and the reason for that is that they are stealing the American taxpayers blind and using it to pay for their extravagant life styles. Who among you would not like to have five or six all expenses paid vacations per year, travel in your own plane sans the distraction of family, you can always send them on another plane, and even have a personal plane for your dog and his trainer who by the way the taxpayers are paying for. If you lived like that you wouldn’t even know there was inflation in the grocery stores and pharmacies, now would you? Our politicians need to be put on a commission salary. They get a small percentage of what is left over after everything else is paid for. I worked that way for several years, and I will tell you the commission basis of pay makes you give your attention to the important things.
If Congress Or Senators get raises this coming year.. . All hell will break loose..
Whats good for the people should also be the same for our representatives. They should get ZERO, Nothing. too.
Just saying, how about if a Congress person abstains or neglects to participate in a vote on legislation for whatever reason, no excuses allowed, they then have their pay reduced because they aren’t doing their job that they were elected to do? Even if it’s for Campaign purposes. And, if that happens too many times during their term of office, there would be a more serious reduction of pay. Make them feel it.
Then there’s their 100% healthcare provisions, like cosmetic dental and vision that all Medicare recipients aren.t allowed? Let them buy their own, “Out-of-Pocket”, like the rest of us.
Of course, as most of us know, most of them are already millionaires, so that little bit they may give up in pay reductions and extra costs for their healthcare wouldn’t mean much as they’re “Serving” our nation. “Serving”, meaning you give up something for the “Pride” in/of serving. Like most all all in “Military Service” to our nation, there is “Pride” in serving or in having served. Let them feel their pride, if they can?
The COLA has never been based on the actual increase in the cost of living. Some expenses, such as those for food, are excluded from the calculation. This year the cost of gasoline dropped and that negative number was writ large in the calculation. The problem is that low petroleum prices are only temporary. Any number of things can happen that will quickly raise them to higher levels than ever before. For instance, and this is a likely scenario, war in the mideast could completely cut off foreign sources of oil and leave us totally dependent on domestic sources. While we may currently have adequate supplies, the entire cost basis would change in a heartbeat. This could happen as soon as next month, leaving those who didn’t receive a COLA short for 14 months or more.
For only the third time in the last 40 years of Cost Of Living Adjustments to Social Security payments is not exactly as you would think. In reality, this would be the third time of zero COLA adjustments since way back to 2010 and 2011. These are the only two years in the last 40 years that there has been zero COLA. This means 2016 will be only the third time in the last six (6) years. That is a whole lot different than, only the third time in forty (40) years, isn’t it? And as you can all see, Obama is the only sitting President to ever deny COLA’s. This will also be the third time in his 7 years in office; twice in his first term and once in his second term. Remember also, how bad the economy has been in his time in office and how he bailed out the auto industry, as well as, many other companies that were supposedly considered too big too fail. And then there was Solyndra. This was the solar energy company that Obama gave a half billion dollars to in order to increase solar energy use in the country, only to have them file for bankruptcy protection shortly after receiving the loan guarantees from Obama. And yet Obama says after all this, and billions wasted in Syria, Afghanistan, Iraq, Libya, etc. etc., and not to mention all the migrants and immigrants he has welcomed, with absolutely no money to pay for them, he can tell us Americans, who have paid into the system throughout our working lives, sorry, but there will be no Cost Of Living Adjustment for you this year, and to say that for the third time in just his 7 years in office, tells me there is more to Obama and the Democrat agenda than meets the eye. What are your thoughts?
It is time for the American People to wake up to what is going on in Washington D.C., these loony tune congress, senators & the President are stealing the country blind. The people need to read and learn about what these idiots are doing to this great country!! We are going to be at 20 TRILLION Dollars in debt before the next president takes office and this country is about to go down the tubes because of how they have enriched themselves at the people’s expense!!!! Get your heads out of you no where, and learn what is going on before it is too late!!!! Look at how rich former Presidents, Congressmen and Senators have become!!!! No wonder they do not want to leave Washington!!!!!!! Bill & Hillary did not have a pot to pee in or a window to throw it out of until they left the white house!!! Now you are going to possibly elect that sneaky, untruthful woman to be president and Putin will be throwing the party, the communist party will be back in Russia and probably in half the world!!!
I’m sure the entire Congress and most of the D.C. workers will experience a nice raise… why not the seniors? We must live on a fixed income, with no chance of an increase in our only source of income. Please reconsider!!!
Obama IS STEALING us blind. Mr. Trump says he will pay back the Social Security Funds which have been used for people other than those who have contributed.
People best wAKE UP AND KNOW VOTING FOR hIlary will be much more of the same lies
and corruption. We need to return to obeying the Constitution and enjoy a safe land
and the ability to say Merry Christmas!! Merry Christmas to all and Happy new Year!!