October 19, 2011
Social Security COLA announcement clouded by looming threat in Congress
Today, the Social Security Administration announced that monthly Social Security benefits will increase 3.6 percent in 2012.
Additionally, due to an increase in average wages, the maximum amount of wages subject to the Social Security tax will increase to $110,100 from $106,800. About 10 million workers will pay higher taxes as a result of this increase in the Social Security payroll tax cap.
Unfortunately, an increase in Medicare premiums will likely completely or partially offset the 3.6 percent Social Security benefit increase.
Furthermore, today’s news is tempered by reports that the congressional “Super Committee” is considering changes to Social Security that will severely hinder retirees’ ability to keep pace with the rising cost of living. The panel may recommend a new statistical formula for future cost-of-living-adjustments, one that would grossly understate the growing financial pressures on retirees.
What the proponents of the change clinically call a ‘Chained-CPI,’ is what millions of seniors would call ‘food, shelter, clothing.’ A recent study showed that, if this change took effect, a worker retiring this year, at age 65, would lose $6,000 in benefits by the time they turned 80.
Social Security did not create our budget deficit – it is fully-funded by worker and employer payroll taxes. It is inexcusable for politicians who never met a tax break they didn’t like to try to balance the budget on the backs of current and future retirees.
The Illinois Alliance for Retired Americans will continue to mobilize retirees to protect the Social Security benefits millions of seniors count on to make ends meet.