Monthly check for $2,753: Which political organizations are behind the proposal?

Those receiving Social Security benefits can count on their monthly payments being adjusted each year to account for inflation. This is especially important for maintaining the purchasing power of older Americans who often live on a fixed budget, as rising prices hit their wallets harder.

This year, the Social Security Administration implemented a historic Cost of Living Adjustment (COLA) of 5.9%, the highest in decades. The increase will increase the average monthly amount the agency pays individual retired workers to $1,657 and couples who both receive benefits to $2,753 according to the agency. estimates.

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Social Security benefits are not keeping pace with inflation

Despite record increases in monthly payments to Social Security recipients, including U.S. retirees – active and disabled – as well as their spouses, widows, widowers and Supplemental Security Income (SSI) recipients, there are warnings that their purchasing power is declining. An October update of an ongoing inflation study by the Senior Citizens League, a nonpartisan seniors advocacy group, found that social security benefits had lost 32% of their purchasing power since 2000.

Moderate inflation in 2020 helped improve the purchasing power of social security benefits reducing the loss to 28% by January 2021, from 30%. However, the high inflation of the first months of the year wiped out all the gains and the loss of purchasing power worsened in the middle of the summer. “To put it into perspective, for every $100 of groceries a retiree could afford in 2000, they can only buy $68 today,” said Mary Johnson, social security policy analyst for the group.

The Senior League would like to see a modest increase in benefits to help protect their purchasing power. Besides, they would like the Social Security administration to either guarantee an annual adjustment of at least three percent 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 recipients to counter the effects of high inflation.

Social Security needs an overhaul to secure benefits

A recent report from the 2021 Social Security Administrators found that without congressional action, pensioners will start receiving lower benefits in 2034. The Social Security Administration will run out of surplus funds in 2034 from the trust that funds the monthly payments. From then on, retirees will only receive 78% of their full benefits.

Legislation has been introduced by Democratic lawmakers on Capitol Hill titled “Social Security 2100: A Sacred Trust.” The bill incorporates all of the extensions that President Joe Biden promised when he ran for the White House. Although no GOP lawmakers have yet signed on, nine out of 10 Democratic lawmakers have co-sponsored the bill.

The proposal would make long-awaited changes to social security, the last major legislative changes were made in 1983. Some of the key features of the bill include modest increase in benefits at all levels, requiring people earning more than $400,000 to contribute to the trust fund through the payroll tax and extends the exhaustion date to 2038 give the legislator more time to ensure the long-term solvency of the law.

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