Friday, October 21, 2016

2017 Social Security COLA Hike Ain’t Too Sweet

A day before the final 2016 Presidential debate, the government announced that Social Security beneficiaries were in for a raise next year. So much for the good news. The bad — very bad — news was that the average increase would be a measly $5-a-month. Though that’s five dollars more than this year, when there was no increase, it’s considerably disappointing for many recipients on a limited fixed budget.
What is especially infuriating is that elected representatives in the House and Senate voted themselves a respectable $3,500-a year hike for fiscal year 2017, which began October 1.
Social Security got negligible attention in the spring primaries and has been pretty much ignored since the presidential campaign got underway. While it’s common knowledge, as well as a GOP platform issue, Republicans, some of whom deem it an excessive entitlement, are eager to cut, slash and privatize Social Security, before it is projected to hit rock bottom in 2034.
Democrats, on the other hand, strongly support kinder, gentler reforms. Hillary Clinton, in fact, proposed increasing the payroll tax limit on wages, which is presently less than $119,000, but is projected to increase about seven percent in 2017. She’s opposed to reforms that would reduce benefits for low and middle income recipients and pledged to continue benefits for the future for those who supplement the system. Unlike many in the GOP, Clinton does not support privatization. Nonetheless, while she’s willing to work with Republicans to maintain the program’s viability, she does support payroll tax increases for those with higher incomes.
Many of the nation’s 60 million retirees, which significantly changes every year as more and more baby boomers stop working, depend on Social Security to supplement their nest egg incomes. Mind you, they have been contributing to the system since they began working and anticipated the funds entitled to them in their golden years. Social Security benefits also go to widows, orphans, the disabled and veterans. Nonetheless, this is the fifth straight year of historically low increases, which is based on cost-of-living adjustments. In the last eight years, there have been no increases three times and it’s never been higher than two percent. COLA is based on prices for necessities, like food, housing, clothing, transportation, medical care and education. With inflation essentially stagnant for the last several years, COLA has hardly budged.
Energy and gasoline prices have dropped in the last year, but medical care has gone up, to offset the effects of inflation.
Improbably, this is one area where Donald Trump veers from the Republican platform and has vowed not to cut Social Security benefits, while promising to tackle the program’s long-term dilemma without raising taxes. Yet, like so many of his plans, he has yet to offer more than shallow specifics.
Social Security’s future is gloomy and Congress needs a sound strategy to reform it.  But, first on the agenda, it must alter the formula to determine subsequent COLA to guarantee current and soon-to-retire seniors a modest, if not comfortable, annual increase.
While federal legislators enact rules that affect Social Security, it has no effect on corresponding hikes for Senate and House members.
Most Social Security recipients would undoubtedly agree that Congressional salary increases should be tied to COLA rates, so our elected representatives understand how retirees cope with an annual pittance. After all, federal legislators already have plenty of perks, supplemented by taxpayers, that most Americans crave, so perhaps it’s time representatives’ pay hikes are based on work output, which, for do-nothing  lawmakers would result in insignificant increases similar to those they serve.
Anything less than a practical modification to the annual cost-of-living-adjustment will compel more and more seniors to seek other methods to augment incomes just to pay for essentials or force them to progressively learn to tolerate lower standards of living.