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AARP should lobby for an emergency Social Security COLA to be effective June 1

Inflation is crushing seniors on fixed incomes.  We cannot wait until next January for a COLA to our benefits, we need relief now!  AARP should demand that the Administration and Congress support legislation that would provide a special, emergency COLA to become effective on either June or July 1st, that would help us meet our living expenses.  This actually wouldn't be a bad idea for every year, providing for two annual COLAs instead of only one.

Honored Social Butterfly

A lot of people are having difficulties with the rise in prices or most everything due to rampant inflation; not just seniors.  

 

Not sure where the money would come from for another COLA - doubt if you would want the computed COLA each year just divided in half for (2) disbursements - seems like that would just cost more administratively.

 

At the Federal level everybody wants something - students with loans want those loans, all or part, forgiven.  People with kids want MORE tax credits, an extended school time with PreK paid for beginning at age 3.  

 

I have the philosophy that if there is a need, the best place to try to get some relief is at the more local level.  Perhaps ask you state legislature to consider giving some relief to seniors or the disabled or people who are making less than a certain amount.  Probably easier to get something thru at the state level than federal.

 

Medicare Part B premiums go up with use of the program so there is always that opposing factor to any COLA.  That's something that seniors could control themselves - perhaps unnecessary Part B care or at least not use it willy-nilly.  Look at the specialist one might be going to - is their service something that a PCP could do - because that would reduce the cost to Med Part B.

 

 

 

It's Always Something . . . . Roseanna Roseannadanna
Conversationalist

@JohnS857378 As you may or may not be aware, Rep.John Larson D-Conn., who is Chairman of the House Ways and Means Social Security Subcommittee, is sponsoring the bill,  Soc Sec 2100 - A Sacred Trust which will be debated in the near future. The Bill is a revision of an earlier Bill introduced in 2019 which did not meet the Executive Office's approval. As I recall, the issue was increasing Social Security (FICA) taxes for all folks including the folks under $400,000 of income. As you may not be aware, the main issue with the Social Security program is lack of revenue. In other words, SS benefits exceed revenue (i.e., FICA taxes, interest on Special Treasury bonds, income taxes on SS benefits). Without a permanent fix (the goal has always been 75 years of funding), the current SS Trust which is approximately $2.9 Trillion will be depleted around 2034/2035. Thereafter, SS benefits will be reduced to just current revenue which is estimated to be about 75% of your SS benefit. I suggest you follow Gail's advice and take a look at the SS 2021 Trustee Report. If the reading gets somewhat complex due to actuarial projections, I found a shorter easier to comprehend article that addresses the "Sacred Trust" which will be in front of Congress shortly. https://www.crfb.org/blogs/sacred-trust-would-weaken-social-security Unfortunately, the article addresses the weaknesses especially the 5 year gimmick that Rep. Larson's bill attempts to use. In my opinion, the politics need to be removed from this important SS fix.

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Honored Social Butterfly

@JohnS857378 wrote:

Let us hope the status quo does not continue so we do not need a permanent fix.

=================

We already need a permanent fix -

Social Security 2021 Trustee Report Summary

From the link:

Based on our best estimates, the 2021 reports show:

The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2033, one year earlier than reported last year. At that time, the fund's reserves will become depleted and continuing tax income will be sufficient to pay 76 percent of scheduled benefits.

 

. . . . Conclusion

Lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Lawmakers should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.

 

 

more at the link 

It's Always Something . . . . Roseanna Roseannadanna
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Very little additional funding would be required, since we will be getting the COLA anyway, just on January 1, 2023, six months later.  There would be a slight increase in benefit payout from compounding, but probably not that much.  The issue isn't the size of the COLA, it's the timing of it.  All of the inflationary increases to the cost of living that have taken place so far this year will be included in the COLA that we receive in 2023.  We would just receive the adjustment six months earlier than we otherwise would, giving us some immediate assistance with meeting expenses that have dramatically increased, instead of having to tough it out for another six months.

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@MichaelJY I am providing a link to the SS COLA calculation https://www.ssa.gov/oact/cola/latestCOLA.html Hopefully, you will understand the correlation between increased FICA wages and the SS COLA. In theory, that is how SS COLA is funded. As workers pay more FICA taxes due to increases in their wages (due to COLA increases and/or raises), those increased FICA taxes fund SS beneficiary COLA increases. There is no free lunch. Over longer periods of time, inflation may decrease; and, accordingly, SS COLA(s) as well. However, past worker COLAs and/or raises are not deducted from their pay. So, those continued FICA taxes will recoup any SS Trust shortfalls which may occur from year to year. Our SS COLA increases, if any, are payable for a 12 month period, January through December. So, you are requesting a double payment for approximately 6 months of 2022 based on an amount that has not been determined. As the SS article points out, the SS Act compares the 3rd Quarter (July, August, September) of the present year versus the 3rd Quarter of the past year, if COLA was payable in that year. SS uses the CPI - W which tracks wages and not the prices of gasoline, food, etc. Although these statistics may be changed with amendments to the SS Act, the biggest hurdle is getting Congress to act.

Honored Social Butterfly

The COLA for 2023 will be computed and pulled from the CPI at the end of the fiscal year (end of September 2022).  The amount of it along with other annual calculations for Social Security and Medicare come out in November with an effective date of January (January benefit).  In the case of SS, since benefits are paid (1) month in arrears, beneficiaries don't see the COLA in their benefits until it gets to them on their scheduled payment date in February, which is paying the January benefit.

 

Medicare Part B premiums for the next year also have to coincide with any COLA increase because of the SS Hold Harmless clause.  It all has to work together 

SSA.gov How the Hold Harmless Provision Protects Your Benefits

 

A lot of things would have to change to produce the same COLA in two different batches.  There's isn't really any compounding.  Social Security is running on a hand to mouth basis - what comes in is paid out and the difference needed to pay all the benefits are paid by the special treasuries in reserve being cashed in / redeemed from the Trust Fund treasury account.

 

The Trust Fund is in such difficult financial shape, with no current correction in the works, this might just expedite its financial problems.  

SSA.gov Trust Fund Data

 

SSA.gov  2022 Fact Sheet

(note the last page):  

Key Years from 2021 OASDI Trustees Report (Using Intermediate Assumptions):

 

  • 2010 OASDI expenditures exceeded income excluding interest and remained in excess thereafter.
  • 2021 OASDI expenditures projected to exceed total income and remain in excess thereafter.
  • 2033 OASI asset reserves are scheduled to be depleted. (At that time income would be sufficient to pay 76% of the OASI scheduled benefits, declining to 72% in 2095.)
  • 2034 OASDI Trust Fund asset reserves are scheduled to be depleted. (At that time, current Social Security taxes would support about 78% of the expected OASDI benefits, declining to 74% in 2095 .)
  • 2057 DI Trust Fund asset reserves are scheduled to be depleted. (At that time, current Social Security taxeswould support about 91% of the expected DI benefits.)

 

It's Always Something . . . . Roseanna Roseannadanna
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Honored Social Butterfly

Well the Sen from FL. has a plan to fix SS and medicare all at once. Just time limit it to every 5 years so that it will die if not reauthorized by Congress. That would make it impossible for any long term planing, or for a trust fund to work period. Could be we need to fix this threat right now.

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