The Detroit News - - News -

With the COLA, the es­ti­mated aver­age monthly So­cial Se­cu­rity pay­ment for a re­tired worker will be $1,461 a month next year.

“For more re­cent re­tirees, the 2019 COLA will be the largest in­crease they have got­ten to date,” said pol­icy an­a­lyst Mary John­son, of the non­par­ti­san Se­nior Cit­i­zens League.

But re­tiree Danette Deakin, of Bo­li­var, Mis­souri, said she feels as though her cost-of-liv­ing ad­just­ment is al­ready ear­marked for ris­ing ex­penses.

Her Medi­gap in­surance for costs not cov­ered by Medi­care is go­ing up, and so is her pre­scrip­tion drug plan. She ex­pects her Medi­care Part B pre­mium for out­pa­tient care will also up.

“It isn’t enough of an in­crease that it takes care of all of the in­creases from health care, plus rent — our rent gets in­creased ev­ery year,” said Deakin, 70, who worked in the fi­nance depart­ment at a boat deal­er­ship.

Health care costs eat up about one-third of her in­come, she es­ti­mated.

“I ap­pre­ci­ate the COLA ad­just­ment, and in no way am I com­plain­ing,” Deakin added. “It’s just that ev­ery sin­gle thing you can talk about goes up. It doesn’t go down.”

By law, the COLA is based on a broad in­dex of con­sumer prices. Ad­vo­cates for se­niors claim the gen­eral in­dex doesn’t ac­cu­rately cap­ture the ris­ing prices they face, es­pe­cially for health care and hous­ing.

They want the gov­ern­ment to switch to an in­dex that re­flects the spend­ing pat­terns of older peo­ple.

“What the COLA should be based on is still a very real is­sue,” said Wil­liam Arnone, CEO of the Na­tional Acad­emy of So­cial In­surance, a re­search or­ga­ni­za­tion not in­volved in lob­by­ing. “Older peo­ple spend their money in cat­e­gories that are go­ing up at a higher rate than over­all in­fla­tion.”

The COLA is now based on the Con­sumer Price In­dex for Ur­ban Wage Earn­ers and Cler­i­cal Workers, or CPI-W, which mea­sures price changes for food, hous­ing, cloth­ing, trans­porta­tion, en­ergy, med­i­cal care, re­cre­ation and ed­u­ca­tion.

Ad­vo­cates for the el­derly would pre­fer the CPI-E, an ex­per­i­men­tal mea­sure from the gov­ern­ment that re­flects costs for house­holds headed by a per­son age 62 or older. It usu­ally out­paces gen­eral in­fla­tion.

COLAs can be small or zero, as was the case in sev­eral re­cent years. Peo­ple of­ten blame the pres­i­dent when that hap­pens. How­ever, the White House can’t dic­tate the COLA, which is cal­cu­lated by non­po­lit­i­cal ex­perts.

Pres­i­dent Don­ald Trump has re­peat­edly vowed not to cut So­cial Se­cu­rity or Medi­care. But the gov­ern­ment is run­ning $1 tril­lion deficits, partly as a re­sult of the Repub­li­can tax cut bill Trump signed.

Mount­ing deficits will re­vive pres­sure to cut So­cial Se­cu­rity, ad­vo­cates for the el­derly fear.

“The rev­enue loss in the tax bill con­trib­utes to much higher deficits and debt, and that is where the threats be­gin to come in,” said David Cert­ner, pol­icy di­rec­tor for AARP.

“So­cial Se­cu­rity, and in par­tic­u­lar the COLAs, have been the tar­get.”

Be­yond fed­eral bud­get woes, So­cial Se­cu­rity faces its own longterm fi­nan­cial prob­lems and won’t be able to pay full ben­e­fits start­ing in 2034.

So­cial Se­cu­rity is fi­nanced by a 12.4 per­cent tax on wages, with half paid by workers and the other half paid by em­ploy­ers. Next year, the max­i­mum amount of earn­ings sub­ject to the So­cial Se­cu­rity tax will in­crease from $128,400 to $132,900.

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