Social Security recipients are expected to get a cost-of-living raise of at least 3.5 percent beginning in January the first increase in three years and Nashville retiree Jack Duggin is all for it.
The government will announce today whether inflation has risen sharply enough over the past year to justify an increase in monthly benefits for about 55 million Social Security beneficiaries under a measure dating to the 1970s that provides for automatic raises when prices hit a certain level.
An increase would be helpful for anyone who is retired, said the 79-year-old Duggin, who lives in Green Hills. The costs for everything are going up, especially groceries, but our incomes are not.
Retirees, surviving spouses, disabled people and others who get federal benefits did not receive cost-of-living adjustments in 2010 or 2011 because inflation remained low.
Yet consumer prices have risen sharply in the past year, climbing an unadjusted 3.8 percent in the 12 months ended in August.
Duggin said seniors on fixed incomes really didnt believe the government when it said prices hadnt gone up steeply enough the past two years to trigger automatic cost-of-living raises for those who depend on Social Security.
Some prices may be the same, but the way theyre doing that is by reducing quantities, Duggin said, referring to consumer goods on supermarket shelves. Pick up a box of cereal, and its not as heavy as it used to be. The price didnt go down, though.
David Penn, an economist at Middle Tennessee State University, said a cost-of-living raise should help senior citizens somewhat, although rising health-care costs make it hard to keep pace. For many retirees, Social Security accounts for more than 90 percent of their income.
Im surprised its that large of an increase, but it probably should be higher, Penn said. The cost-of-living increase has been tied to average pay, but there have been discussions about adjusting it to consider including health-care expenditures.
And that has been rising a lot faster than other things in the Consumer Price Index, Penn said. (But) Im not sure Social Security could afford to keep up with increases in health care.
The average monthly Social Security benefit is $1,082, or about $13,000 a year. With a 3.5 percent increase, that would mean a raise of almost $38 a month, or an additional $455 a year, for the typical recipient.
It seems like its time to have an increase, and 3.5 percent is better than nothing which is what weve been getting the past two years, said retired Metro schoolteacher Charlotte McAnally. But I hope were going to continue to have Social Security.
The thing we hear about all the time is theyre trying to modify it or take it away from us, the 71-year-old McAnally said. I think they can find other ways to raise money for the government. There is enough in the Social Security Trust Fund to pay every eligible American for the next 25 years, as long as they dont keep taking money out to pay for other things, such as armaments.Worries remain
Renette Corenswet, 88, of Nashville also worries that benefits might be reduced or taken away in the long run.
I guess Im like everybody else, she said. I just hope they dont subtract from what were now getting. Everything costs so much these days, so were just asking that they dont decrease our payments.
Before the annual increases stopped two years ago, they had averaged about 4.2 percent a year since the automatic adjustments began. The last time Social Security payments were adjusted, in 2009, they went up 5.8 percent, the largest increase in 27 years. That big raise was attributed to a spike in energy prices. But energy quickly dropped in 2009, and housing prices fell, contributing to lower inflation the past two years.
People certainly feel like they are falling behind, said David Certner, legislative policy director for the AARP, and these are modest-income folks to begin with, so every dollar counts. I think sometimes people forget what seniors incomes are.
Part of the Social Security increase in January could be lost to higher Medicare premiums, which are deducted from Social Security payments. Medicare Part B premiums for 2012 are expected to increase.