COLA Watch – 2.8% Looking More Certain, But…
It’s looking more and more like the 2019 cost-of-living adjustment (COLA) for Social Security beneficiaries will land at 2.8%. Yes, that’s the largest since 2012 and yes, it’s 40% higher that the 2018 adjustment. But as MarketWatch reporter Alessandra Malito points out in a post on marketwatch.com, “It’s out of step with what retirees are spending.” Driven by higher rates of inflation in medical costs and housing costs, seniors will still be facing a systematic loss of spending power, despite maintaining parity with the CPI-W general inflation indicators.
Ms. Malito’s post cites the on-going problem of Medicare Part B premium increases and their impact on COLAs as an example, and references the research that has been conducted into the use of a calculation more aligned with seniors’ spending categories (CPI-E). IN this latter area–CPI-E–she notes that studies by the Bureau of Labor Statistics have shown that “elderly expenses outpace those of urban workers,” the base population segment addressed by CPI-W.
COLA concerns are a major part of a plan developed by the Association of Mature American Citizens (AMAC) to resolve the Social Security solvency issue. For example, AMAC’s plan–the Social Security Guarantee and Social Security Plus Initiative–would provide for a guaranteed COLA every year (remember that there were three years of zero increase in the past decade), with adjustment amounts providing higher percentages for lower income households. Any increase in the overall expense faced by Social Security would be offset by the Guarantee’s other provisions. It’s in keeping one of the plan’s prime directives: “Guarantee an increase in benefits for those with lower earnings,” a measure that would help guard against the continuing loss of buying power faced by lower-income seniors.
Read Ms. Malito’s post here, and learn more about AMAC’s Social Security Guarantee here…