How many people will benefit from the Social Security increase in Texas?
More than four million seniors and disabled people in Texas receive Social Security benefits. Many will see a significant increase in their checks in 2022.
On 13 October, the Social Security Administration announced a 5.9 percent COLA increase that would be applied to benefits next year. The pandemic has led to a sharp increase in prices across the country, which can make meeting ends meet on a fixed income very difficult.
In 2020, 4.4 million people were claiming Social Security benefits in Texas, and with the historic benefit increase coming, many are hoping that it will be enough to keep up with inflation.
#ICYMI About 70 million Americans will get a 5.9% increase in monthly #SocialSecurity benefits and #SSI payments in 2022. For more info, visit our blog here: https://t.co/qUcuvE1BU9 pic.twitter.com/qF29nn05IT— Social Security (@SocialSecurity) October 14, 2021
Who will see an increase?
The yearly COLA applies to all beneficiaries equally. In 2020, Yahoo News estimated the average monthly benefit in Texas to be $1,495, and when applying the 2021 and 2022, the average increases to $1,602. From this year to next, the average benefit could increase by almost $90.
Just over three million of the individuals receiving Social Security benefits in Texas are retirees. In 2017, around two-thirds of retirees had access to a private retirement account which helped to boost their monthly income.
Shifts away from pensions and other defined benefit plans
Researcher, Laura Rosen of the Center for Public Policy Priorities at the University of Texas at Austin found that “Disparities in access to a retirement plan at work are greatest for workers that are: employed by small businesses, under the age of 45, less educated, work in a low-wage job, and are Hispanic, Black or Asian.”
Rosen noted changes in the types of retirement accounts available to workers in Texas which have shifted dramatically over the last few decades.
In 1980, half of private-sector workers had access to a defined retirement account like a pension, where the employer bears much of the responsibility. In contrast, only about nineteen percent of workers held a defined contribution plan like a 401k.
Today, these figures are flipped, with fifty-three percent having access to a contribution-based plan and only eleven percent having a defined benefit plan. What this data also shows is that compared to 1980, the percent of workers with any sort of retirement account has decreased by five percent.
Rosen argues that to combat these inequalities and ensure that seniors have more substantive incomes in old age, changes to encourage saving must be incentivized. Through her research, Rosen found that eighty-four percent of full-time workers in the private sector who are offered a private retirement savings account took advantage of the benefit.
Currently, the average monthly benefit amount paid by the Social Security Administration in Texas accounts for about thirty-six percent of the average salary a retiree had before exiting the workforce. Should they have no other source of income, stark and sudden changes to their lifestyle will have to be made as their disposable income will shirk significantly.
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