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Seniors were happy to get a big increase of 5.9% to their Social Security payments this year, but it may not have been enough. It was announced by the Bureau of Labor Statistics today that The Consumer Price Index rose 7.5% year-over-year in January. That came in well above the median forecast of 7.3% from economists surveyed by Bloomberg. It is the strongest consumer price growth since 1982!
According to a Pew Research poll, roughly half of Americans younger than age 50 believe they won’t receive any Social Security benefits. However, that’s unlikely to be the case. It’s true, we haven’t had a surplus in the Social Security Trust Fund since 2010 and if nothing is done in the next couple of decades there would have to be cuts in Social Security benefits. The current date for that is 2034. However, this would be a big political fiasco for anyone in office at the time, so politicians are likely to act well before that happens. Hopefully they will raise payroll taxes. However, another option they have is to keeping raising the year in which you retire.
Many seniors have been elated to read in the paper that their Cost of Living Adjustment (COLA) in their Social Security Payments is likely to rise more than 6% come January. However, before you get too excited, news just broke that inflation in the U.S. hit a 31 year high in October at 6.2%. “It increasingly appears that the COLA for 2022 will be the highest paid since 1983 when it was 7.4%,” Mary Johnson, Social Security policy analyst for the Senior Citizens League, told AARP Bulletin (October, 2021 P4). The increase in 22021 was only 1.3% and over the past 10 years it has increased by 1.7%. Let’s hope inflation rates decline next year!
A House bill sponsored by Democrats called Social Security 2100 : A Sacred Trust does much to help seniors, boosting benefits in a number of areas. Introduced by Rep. John Carson, D-Conn. who serves on the House Ways and Means Social Security Subcommittee is a bit perplexing as it is adding to a looming deficit and does nothing to address how our nation will pay for it. Some key issues in the bill:
Benefits would be set at 125% above the poverty line and tied to current wage levels;
Both new and existing beneficiaries would get a 2% increase in their benefit, on average;
The bill would repeal rules that reduce Social Security benefits for workers and their spouses, widows or widowers who also have pension income (called the Windfall Elimination Provision and Government Pension Offset); and
Annual cost-of-living adjustments would be tied to the Consumer Price Index for the Elderly, or CPI-E.
The latest estimates from the government are that by 2034, Social Security benefits will drop to 78% of what has been promised, and this new bill extends that date to 2038 to give Congress more time to come up with a long-term solution to the program’s solvency issues. There is a provision for an increase in the wages cap where workers have to pay Social Security Tax (up from $147,000 to $400,000). However, this will likely be offset from a provision in the bill which would only require Social Security recipients to pay taxes on earnings above $35,000 ($50,000 for couples), up significantly from $25K and $32K respectively. This seems to me like Congress just kicking the can down the road—why not try and solve this issue now?
There was good news and bad news in the release from the Social Security Administration. Recipients of Social Security will see a 5.9% boost in their payments starting next January. On average, this will mean a $92 boost to $1,657/month, although payments can vary widely based on your lifetime earnings. That’s the largest increase since 1982. The bad news : inflation, which is what is driving the cost of living increase, is rising sharply.
https://www.wsj.com/articles/social-security-cola-increase-2022-11634067648?mod=djem10point
Trustees for the Social Security trust fund have revised their forecasts, and although the pandemic weighed heavily on the system, it was not as bad as originally thought. The program is forecasted to be out of funds by 2034, just one year sooner than they had forecast in their April 2020 report. Unless Congress shores up the fund, benefits will be automatically reduced starting in 2034. Also weighing heavily on Social Security is the fact that inflation has increased, pushing up the cost of living increase which will further deplete funds. “There is an incredible amount of uncertainty,” one senior administration official said. “We haven’t lived through a pandemic like this in over 100 years, so we don’t know what the effects are.”
Spousal Social Security benefits can be hard to decipher, so I was glad that Elaine Floyd, the director of retirement and life planning at Horsemouth, sat down with USA Today reporter Robert Powell to explain some of the innuendos. “What we seem to be dealing with most these days are people who want spousal benefits and don’t understand the conditions under which they can receive them,” she said. Here are some tips:
A very unpopular bill called The Time to Rescue United States Trusts (TRUST) Act is now working its way through Congress. If passed, it would set up groups of a dozen lawmakers with the power to recommend cuts to Social Security and Medicare. This would hit the most vulnerable. Half of those covered by Medicare have incomes of less than $27K. Social Security is the main source of income for more than 34 million older households. Under the new law, if seven of the twelve committee members approve of changes, they would be fast tracked in both the House of Representatives and the Senate, with no adequate debate among lawmakers and no amendments permitted on the floor of the House or the Senate. To make sure that your senators and representative know you oppose the TRUST Act, please go to https://action.aarp.org/trustact.
There is good news and bad news in a new report coming out from The Senior Citizens League, a non-partisan senior group, which raised their forecast for the Social Security from 5.3% to 6.1%. That’s a huge increase from prior years. However, it’s based on a basket of goods cost of living (COLA) increase, which means that the increase will likely just make up for a 6.1% hike in goods and services that you buy every day. In addition, some things like real estate and rental prices, medical costs and long-term care are skyrocketing.
In a rare move, a senior government official, Andrew Saul—the Commissioner of the Social Security Administration, was asked to resign by the President of the United States and refused. As a result, President Biden, after receiving advice from White House Counsel that he could legally remove him, fired him. Saul had a contract to serve a six-year term expiring in January of 2025 which only allowed for his termination for “neglect of duty” or malfeasance in office.” However, the Supreme Court recently ruled requiring cause for removal of a federal employee was unconstitutional. Perhaps preparing for a legal battle with Saul, The White House issued a scathing press release which said, “Since taking office, Commissioner Saul has undermined and politicized Social Security disability benefits, terminated the agency’s telework policy that was utilized by up to 25% of the agency’s workforce, not repaired SSA’s relationships with relevant federal employee unions including in the context of COVID-19 workplace safety planning, reduced due process protections for benefits appeals hearings, and taken other actions that run contrary to the mission of the agency and the president’s policy agenda.” President Biden also called for the resignation of the agency’s deputy commissioner David Black, who submitted his resignation. Kilolo Kijakazi, the Social Security Administration’s deputy commissioner for retirement and disability policy, will serve as acting commissioner.
https://federalnewsnetwork.com/people/2021/07/biden-fires-saul-as-ssa-commissioner/