2019 COLA ad­just­ment high­est in 7 years

Orlando Sentinel - - BUSINESS - By Ricardo Alonso-Zaldivar

WASHINGTON — Tens of mil­lions of So­cial Se­cu­rity re­cip­i­ents and other re­tirees will get a 2.8 per­cent boost in ben­e­fits next year as in­fla­tion edges higher. It’s the big­gest in­crease most re­tired baby boomers have got­ten.

Fol­low­ing a stretch of low in­fla­tion, the cost-of-liv­ing ad­just­ment, or COLA, for 2019 is the high­est in seven years. It amounts to $39 a month for the aver­age re­tired worker, ac­cord­ing to es­ti­mates re­leased Thurs­day by the So­cial Se­cu­rity Ad­min­is­tra­tion.

The COLA af­fects house­hold bud­gets for about one in five Amer­i­cans, in­clud­ing So­cial Se­cu­rity ben­e­fi­cia­ries, dis­abled vet­er­ans and fed­eral re­tirees. That’s about 70 mil­lion peo­ple, enough to send rip­ples through the econ­omy.

Un­like most pri­vate pen­sions, So­cial Se­cu­rity has fea­tured in­fla­tion pro­tec­tion since 1975. Ben­e­fi­cia­ries also gain from com­pound­ing be­cause COLAs be­come part of their un­der­ly­ing ben­e­fit, the base for fu­ture cost-of-liv­ing in­creases.

None­the­less many re­tirees and their ad­vo­cates say the an­nual ad­just­ment is too mea­ger and doesn’t re­flect higher health care costs for older peo­ple. Fed­eral bud­get hawks take the op­po­site view, ar­gu­ing that in­creases should be smaller to re­flect con­sumers’ penny-pinch­ing re­sponses when costs go up.

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, Mo., 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 in­crease.

“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 onethird of her in­come, she es­ti­mated.

The COLA is 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, 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.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.