Here’s the Single Biggest Problem With Your Upcoming Social Security Increase

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There are only a few weeks left before Social Security recipients find out just how big the raise they will receive in 2023. It’s going to be a huge increase in every way.

Hip Hip, hooray? Not so fast. Certainly, retirees urgently need a major cost of living (COLA) adjustment. However, it will not be as useful as some may think. This is the biggest problem with your upcoming Social Security increase.

Image source: Getty Images.

The horse is out of the stable

You have no doubt heard the old expression, “The horse is out of the barn.” The idea is that it’s too late to prevent damage after something has already happened.

Inflation is kind of that proverbial horse. He’s definitely out of the shed by now. Retirees who depend on Social Security have seen prices rise significantly for almost everything they regularly buy this year.

Social Security implemented annual COLAs in 1975 to offset the negative effects of inflation on retirees. However, the adjustments are only calculated based on inflation levels in the third quarter of the current and previous years. They also don’t come into effect until January of the following year.

The main problem for retirees is that the increased benefits don’t arrive until long after they feel the sting of inflation. COLAs are certainly helpful, but they come too late to meet the immediate needs of cash-strapped seniors.

Social Security recipients will likely receive a 9% margin increase as things stand. That extra money will make it easier to pay bills next year. However, it will do nothing to offset the increased costs that retirees have incurred in 2022.

Another problem

This isn’t the only problem with Social Security COLAs. Not only are the adjustments overdue, but they are arguably too little.

The Social Security Administration (SSA) uses the Consumer Price Index for Urban Wages and Employees (CPI-W) to measure inflation. This measure affects the prices of many products and services that people buy, including food, clothing, housing and transportation. However, it does not specifically address all costs routinely incurred by retirees.

Social Security recipients have lost more than 30% of their purchasing power since 2000 because COLAs were not high enough for retirees, according to an analysis conducted by the Senior Citizen’s League. An important reason for this is that the CPI-W does not adequately reflect the healthcare costs of seniors.

This issue has prompted some to replace the CPI-W with the Consumer Price Index for the Elderly (CPI-E). The CPI-E is designed to measure the cost of living for Americans age 62 and older. Basing Social Security increases on this inflation measure would likely help seniors manage inflation better than the current method of calculating COLAs.

A bright spot

There is one bright spot that could make these two issues less of a problem for retirees in 2023. Medicare Part B premium increases should be much lower than they were.

In 2022, standard Medicare Part B premiums increased by 14.5%. A significant part of this big jump was due to projected higher Medicare costs associated with: biogenAlzheimer’s drug, Aduhelm.

However, earlier this year, the Centers for Medicare and Medicaid Services (CMS) decided to pay Aduhelm only for Medicare beneficiaries who participated in clinical trials. Because of this move, Medicare Part B premiums will be reduced in 2023.

Retirees have paid more for Medicare Part B this year than they should. CMS couldn’t think of a way to return money to seniors sooner “because of the legal and operational hurdles in adjusting Medicare premiums mid-stream in 2022.” But – in this case at least – the upcoming lower premiums could help get the horse back in the stable.


The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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