Alessandra Malito reports for MarketWatch that people receiving Social Security benefits might not see an increase in their checks in 2021. Any increase is based on the consumer price index (CPI), which did not rise in the first four months of this year. But, we won’t know whether Social Security benefits will increase until October.
For years, advocates have called for a change in the way Social Security benefit increases are calculated. Increases in Social Security benefits should track increases in typical spending for older adults and people with disabilities who rely on Social Security benefits. For example, older adults tend to spend more on health care than younger people. That measure is called the CPI-E. But, instead, the Social Security benefit increase is tracked to prices that are not as likely to affect people receiving Social Security benefits as much, such as oil prices.
As a result, Social Security checks have risen at a far slower pace than the cost of goods that older adults typically buy. Over the last 20 years, Social Security benefits have grown by 53 percent. But, the cost of goods older adults tend to purchase has practically doubled, up 99.3 percent.
Average prescription drug spending, a major expense for many older adults, has nearly quadrupled over the last 20 years, at $3,875.76 in January 2020 from $1,102 in 2000. At the same time, Medicare Part B premiums have nearly tripled.
Big health care price increases, which the COLA adjustment for Social Security does not adequately take account of, are largely responsible for the fact that the purchasing power of Social Security benefits has fallen 30 percent in 20 years.
We can and should expand expand Social Security. We can afford it. The majority of the public supports it. And, it makes sense as a public policy priority in order to ensure the financial well-being of older adults and their families.
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