Social Security’s 2025 COLA, and a “World of Distress” - The Motley Fool; TSCL
The 2.5% cost-of-living adjustment is a welcomed boost for Social Security beneficiaries; that’s a given. And the fact that this adjustment reflects a lessening of the inflationary pressures that have weighed on the economy for the past four years is indeed a good sign. Right?
Well, according to a post today by The Motley Fool’s Maurie Backman, recent history tells a different story about seniors and their ability to keep their heads above water financially. Her article cites reports from the nonpartisan Senior Citizens League (TSCL) indicating that COLAs since 2010 have been inadequate for seniors to keep pace with the relentless cost of living. As a result, she notes, “Social Security recipients may unfortunately be in for a world of financial distress in 2025” despite the increase.
Earlier this year, TSCL reported that the buying power of the benefits received by seniors has declined by 20% since 2010. Ms. Backman’s article explores this issue, citing a “flaw” in the COLA calculation process that results in the annual adjustment failing to adequately measure spending categories more common to seniors. She’s referring, of course, to the Consumer Price Index for Americans 62 years of age and older, or R-CPI-E, more commonly known in the media as CPI-E. TSCL advocates adoption of this measurement in place of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) currently used. At this point, it’s anybody’s guess whether a COLA methodology change will happen soon since what is more critically needed is an extensive restructuring of Social Security to address the well-known insolvency issue and the rapidly diminishing timeframe for its resolution.
Absolutely something needs to be done about the lack of planning and attention being paid to the Social Security fund depletion issue! As a 73 year old, I am deeply concerned about this issue for my husband and myself as well as future generations. Taxpayer monies have been carelessly used with every generation passing the problem on to the next generation.
Hopefully President Trump will tackle this issue that affects so many Americans rather than passing the problem on until it’s completely depleted.
Joan:
Thank you for your comments. We fully recognize your concerns, and are working aggressively with our parent organization (AMAC, Inc.) and AMAC’s advocacy organization (AMAC Action) to bring about a solution to the trust fund depletion problem. AMAC’s Social Security Guarantee proposal, a framework of changes that would address the problem, can be viewed at this URL:
amac.us/social-security-guarantee. Our proposal, if enacted, would ensure Social Security’s solvency for current beneficiaries at least the coming generation. You can support this effort by contacting your congressional representatives and strongly suggesting they prioritize this issue.
One thing I would like to clarify, though, relates to your comment that “taxpayer monies have been carelessly spent.” If you are relating this belief to Social Security’s financial problems, I can assure you that this very common myth is incorrect. Our analysts have researched this matter at length to verify that no tax dollars ever collected for Social Security have ever been used for purposes other than paying benefits or operating the system. Unfortunately, this persistent myth that “the funds have been stolen” has a tendency to misdirect attention away from the true causes of the insolvency problem. These causes are discussed at length in the Social Security Guarantee document mentioned earlier.
Rest assured that the AMAC Foundation is dedicated to advocating a solution to this problem, and will continue to do so in the months and years ahead. We appreciate your interest and your support.
Gerry Hafer
AMAC Foundation Social Security Advisor
The above is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org