$2,753 monthly check: what political organizations are behind the proposal?
This year the Social Security Administration estimates that the average monthly payment to retired couples will be up to $2,753 after a historic 2022 COLA.
Those receiving Social Security benefits can count on their monthly payments being adjusted annually to account for inflation. This is especially important to maintain purchasing power for older Americans who often live on a fixed budget, as rising prices hit their pocketbooks harder.
This year the Social Security Administration implemented a historic cost-of-living adjustment (COLA) of 5.9 percent, the highest in decades. The increase will raise the average monthly amount that the agency pays individual retired workers to $1,657 and couples that both receive benefits to $2,753 according to agency estimates.
Social Security benefits not keeping pace with inflation
Despite the record boost to monthly payments to Social Security recipients, including retired Americans - working and disabled individuals - as well as their spouses, widows, widowers, and Supplemental Security Income (SSI) recipients, there are warnings that their buying power is falling behind. An update in October to an ongoing inflation study by The Senior Citizens League, a nonpartisan senior advocacy group, found that Social Security benefits had lost 32 percent of their purchasing power since 2000.
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Mild inflation in 2020 helped improve buying power of Social Security benefits cutting the loss to 28 percent by January 2021 from 30 percent. However, high inflation in the early months of the year, saw all gains wiped out and the loss of purchasing power deepen by mid-summer. “To put it in perspective, for every $100 worth of groceries a retiree could afford in 2000, they can only buy $68 worth today,” said Mary Johnson, a Social Security policy analyst for the group.
The Senior Citizens League would like to see a modest increase in benefits to help protect their purchasing power. Additionally, they would like the Social Security Administration to either guarantee at least a three percent annual adjustment to benefits or use the Consumer Price Index for the Elderly (CPI-E) to calculate future COLAs. The group also launched a campaign for a $1,400 stimulus check for beneficiaries to counter the effects of high inflation.
Social Security needs an overhaul to guarantee benefits
A recent 2021 Social Security Trustees report found that without action by Congress, retirees will start to receive lower benefit payments in 2034. The Social Security Administration will run out of excess funds in 2034 from the Trust that finances monthly payments. Starting then, retirees will only receive 78 percent of their full benefit.
Legislation has been introduced by Democratic lawmakers on Capitol Hill called “Social Security 2100: A Sacred Trust.” The bill incorporates all the expansions President Joe Biden promised while running for the White House. Although no GOP lawmakers have signed on yet, nine out of ten Democratic lawmakers have co-sponsored the bill.
The proposal would make some long overdue changes to Social Security, the last major legislative changes were made in 1983. Some of the main features of the bill include modest boost to benefits across the board, requiring people earning over $400,000 to contribute to the Trust Fund through the payroll tax and extends the depletion date to 2038 to give lawmakers more time to ensure the long-term solvency of the entitlement.