Retiree checks to rise 1.3% in 2021 amid coronavirus fallout
WASHINGTON » Social Security recipients will get a modest 1.3% cost-of living-increase in 2021, but that might be small comfort amid worries about the coronavirus and its consequences for older people.
The increase amounts to $20 a month for the average retired worker, according toestimates released Tuesday by the Social Security Administration. That’s a little less than this year’s 1.6% cost-ofliving adjustment, or COLA.
The COLA affects the personal finances of about 1 in 5 Americans, including Social Security recipients, disabled veterans and federal retirees, some 70 million people in all.
The economic fallout fromthe virus has reduced tax collections for Social Security andMedicare, likely worsening their long-term financial condition. But there’s been no real discussion of either program in the personally charged election contest between President Donald Trump and Democrat Joe Biden.
“It’s very difficult to talk about anything policy-wise,” saidMary Johnson, an analyst with the nonpartisan Senior Citizens League. “We are looking at a period where there are growing inadequacies in Social Security benefits, particularly for people with lower-to-middle benefits.”
With the just-announcedCOLA, the estimated average Social Security payment for a retired worker will be $1,543 a month next year. A typical couple’s benefits would increase$33to$2,596permonth.
“The guaranteed benefits provided by Social Security and the COLA increase are more crucial than ever as millions of Americans continue to face the one-two punch of the coronavirus’s health and economic consequences,” said AARP CEO Jo Ann Jenkins.
But Diana LaCroix, of Omaha, Nebraska, says her COLA doesn’t cushion rising health care costs most years. And she has new responsibilities. Her youngest daughter and two grandsons moved in with her this summer after the daughter’s landlord decided to sell the house they were renting.
LaCroix, retired fromcustomer service jobs, is now buying diapers some days as she scrounges for good deals on hand sanitizer. “Something’s got to give,” she said. “Something’s got tochange.”
People 65 and older went for Trump in 2016, but this election some polls show Biden even with Trump among older voters, or ahead.
Trump has kept his promise not to cut Social Security benefits, but this summer he sent confusing signalswithaplan to temporarily suspendcollectionof certain taxes that fund the program. While theWhiteHouse staffsaid it was a limited measure that would have no lasting impact, Trump kept hinting to reporters that he had much bigger tax cuts in mind. Early in the year, he told an interviewer he wanted to tackle “entitlements,” or benefit programs, in a second term.
Biden has a Social Security plan that would revamp the COLA and peg it to an inflation index that more closely reflects changes in costs for older people, particularly health care. That’s been a priority for advocates. He would also increase minimum benefits for lower-income retirees, addressing financial hardship among the elderly.
The former vice president would raise Social Security taxes by applying the payroll tax to earnings above $400,000 a year. The 12.4% tax, equally distributed among employees and employers, currently only applies to the first $137,700 of a person’s earnings. The tax increase would pay for Biden’s proposed benefit expansions and also extend the life of program’s trust fund by five years, to2040, according to thenonpartisan Urban Institute.