A new bill aims to update the calculation of yearly benefits, potentially resulting in higher Social Security payments for seniors.
For years, seniors have expressed their dissatisfaction with Social Security’s cost-of-living adjustment (COLA) as it fails to consider the actual inflation they experience on essential expenditures such as health care, housing, and groceries.
If the Boosting Benefits and COLAs for Seniors Act is enacted, seniors can expect to see significant increases in their annual benefits.
Senator Kirsten Gillibrand, a New York Democrat, introduced a bill aimed at assisting senior citizens. The bill aims to address the issue of seniors facing higher inflation rates compared to the general population, which often leads to a decrease in their purchasing power despite annual cost-of-living adjustments (COLAs).
In her Wednesday announcement of the bill, Gillibrand emphasized the critical role of Social Security as a vital source of income for older adults. She acknowledged that while it serves as a lifeline for many, the benefits provided by Social Security have not been able to keep up with the rising costs of living. As a result, countless older Americans are facing difficulties in affording essential necessities, particularly when it comes to healthcare expenses.
The Boosting Benefits and COLAs for Seniors Act aims to incorporate the exorbitant expenses of healthcare into the calculation of Social Security benefits. This legislation seeks to prevent seniors from facing the difficult choice of either affording their medication or meeting other essential needs.
The current method of calculating the COLA for Social Security relies on the Consumer Price Index (CPI) for urban wage earners and clerical workers. However, the Boosting Benefits and COLAs for Seniors Act proposes a change that would take into account the CPI for the elderly. This adjustment is important because it better reflects the rising costs of healthcare, which disproportionately affect seniors compared to other Americans.
“The statement from Gillibrand emphasizes that the hardworking older adults, who have dedicated their lives to work, saving, and supporting Social Security, should be able to enjoy a comfortable and financially secure retirement. It is crucial that they are not forced to make difficult choices between housing, financial stability, and healthcare.”
Financial literacy instructor for the state of Tennessee, Alex Beene, advises caution to Social Security recipients who are anticipating a significant increase in their payments.
Beene, in an interview with Newsweek, expressed both optimism and caution regarding the impact of higher health care costs on seniors. He stated that while the promise of increased health care costs being a significant factor is welcomed by many seniors struggling with rising prices, it remains to be seen how other living expenses will be factored into the adjusted model. Beene hopes that these other expenses will also be considered generously, similar to how health care costs are intended to be accounted for.
According to Kevin Thompson, a financial adviser and the founder and CEO of 9i Capital Group, there are growing concerns about the potential impact of the bill on the Social Security Administration’s expected insolvency as well.
Experts predict that if no changes are made, Social Security will be unable to provide full payments by 2033. This is due to the increasing number of baby boomers entering retirement and the decreasing number of individuals in the workforce. Consequently, there will be insufficient funds to sustain the program.
“To me, it is concerning that you are seeking to extract more from the existing system, as this will only hasten its impending insolvency,” Thompson expressed to Newsweek. “I believe it is crucial to find a solution that not only benefits the elderly but also ensures the long-term viability of Social Security.”