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2021 Social Security checks might not increase

Written by Diane Archer

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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1 Comment

  • …indeed. Aside from medications and, Medicare premiums, one other expense that has skyrocketed, particularly since the last recession, has been rent. This coupled with a critical shortage of low income housing in many cities is putting a terrible squeeze on those who are not homeowners (since the recession more people have become renters than owners including many seniors).

    Over the past two years I have experienced two rent increases, the last one being more than my living cost adjustment for this year so I am now falling behind. The worse part of it, I am in what is classified as Federally subsidised low income housing, and it is managed by a big corporation that owns multiple buildings (including high end “luxury” apartments) all over the region, not an individual landlord with one property. Currently my rent is 53% of my monthly income and with no cost adjustment that percentage will go even higher, particularly if rent it increased again. There are many others in a similar position as well who only have Social Security as their sole source of income., and would they have to deal with market level rents, they’d be out on the street.

    Should the bottom fall out of the economy again (and it appears to be heading that way) there will likely be more foreclosures and repossessions as we are in that sub prime bubble again. This means more homeowners becoming renters.

    We should not be held hostage because of the effect the pandemic had on consumer prices. This has been an unprecedented event and in some cases has caused prices (such as food and certain necessities) to increase dramatically. Also with stay at home orders utility usage has increased resulting in higher than normal utility bills. I always questioned petrol’s role in determining SS living costs as many seniors don’t drive and it’s price is rather “volatile” as we have seen during the pandemic. Rental housing costs would make more sense as having a place to live is far more a necessity than an automobile.

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