Social Security Benefits Eroded By Inadequate Inflation Adjustment

The Social Security Administration on Thursday will announce some news that will be distressing to more than one in four households: there will be no Social Security cost of living adjustment (“COLA”) for 2016.

This is no small matter. The purpose of the annual adjustments is to ensure that Social Security’s benefits don’t lose value over time. They are intended to keep seniors and other beneficiaries afloat, to allow them to tread water. But seniors are not floating; they are sinking.

You would be hard pressed to find a senior who has not seen the cost of medical care, prescription drugs, food and other necessities go up. You would also be hard pressed to make the case that Social Security benefits are too generous. Averaging just around $16,000 a year, they replace just 40 percent of a medium-income worker’s wages. Modest though they are, Social Security benefits are vitally important. Two-thirds of seniors rely on their Social Security benefits for half or more of their incomes. Social Security constitutes virtually all of the income of one-third of senior beneficiaries. The dependence is even higher among workers who have become disabled.

– Our Future

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