I currently receive a Social Security benefit check of $985 a month, which is a spousal benefit I qualified for, one of the last to be able to make use of the so-called file-and-suspend option for married people reaching age 66 that the Obama Administration and Congress agreed to do away with two years ago, in one of many small cuts being applied to the Social Security program.
This year that benefit, like the benefit checks of all 60 million people (one in five of all Americans) on Social Security, rose by a scant 0.3 percent, taking my check from $983 a month last year to its present level — a rise of $2.00 a month (I was actually screwed out of a dollar because of crooked rounding!).
Now we learn that the Federal Reserve is raising the benchmark interest rate a notch because inflation is actually running at close to 2 percent — the “target” of the Federal Reserve Bank’s policy makers for achieving what they call a “health economy.”
Now don’t tell me that inflation was running at 0.3 percent last year and that it’s now 2.0% three months later. We didn’t just have a huge 1.7% jump in prices of everything over the past three months.
The truth: This is a screw job on the elderly and the disabled, pure and simple.
The claim that our costs of living didn’t really change over the course of 2016 was a fraud. Everyone knows it. Food prices rose dramatically last year. So did fuel costs, for both heating and driving. Transportation costs rose, and so did car prices. Rents went up, and so did interest rates on borrowing for a home or a home equity loan. And health care costs — a big one for the Social Security set — rose 6.5%, which is what they’re expected to rise by this year too. And do you know what percent of their income the elderly spend on healthcare? It’s 20% across the board. Since it’s safe to say that nothing the elderly (or anyone else) has had to buy in 2016 got any cheaper, clearly our cost of living rose a damn sight more than the measly joke of an increase of 0.3 percent that we saw (or didn’t notice) in our benefit checks!
Clearly Congress should be revisiting this year’s cost-of-living adjustment and making it match what the Fed says inflation has really been. It’s wrong for the government to be keeping a double set of books on something like this, yet that is exactly what they’re doing! (The Fed uses the BLS’s so-called Core-CPI Index, which has been running at 1-2 percent a year for several years, while the Social Security Administration, by act of Congress, uses the so-called CPI-W Index, which has been under-reporting inflation for years and in the past couple of years, led to a zero increase in Social Security benefits for 2016 and a next-to-nothing 0.3 percent benefit increase for this year.)
But I’m not holding my breath for any action on that front. This is the Congress that at this moment is attempting to pass a bill killing the so-called Affordable Care Act and replacing it with a Republican measure that besides throwing 24 million people (many of them elderly) off their ACA-subsidized health insurance plans, will increase the cost of supplemental health insurance (the insurance that covers doctors and drugs, as Medicare only covers hospital care) by as much as — hang on to your seats — 750 percent!
It’s almost like the Republican party took to heart the idea of a wretched former Democratic Governor of Colorado, Richard Lamm, who famously said back in 1984, at the tender age of 48, in a discussion on the rising cost of health care with respect to the elderly who have the gall to make use of costly medical care to try and live longer: ”You’ve got a duty to die and get out of the way. Let the other society, our kids, build a reasonable life.”
Seriously. He did say that. (Lamm, who directs an institute at the University of Denver, where he no doubt receives a beaucoup subsidized health insurance plan, appears to be in excellent health, but at 81, I’m guessing his insurance company has already paid for some kind of life extending or life-improving medical care by now for him. It’ll be interesting what he does when, over the next few years, something potentially terminal comes along to threaten him or his spouse.)
But the Republicans in Congress are basically now doing what Lamm was suggesting, by trying to pass a bill that would price the poorer elderly out of the insurance market and cause them to die whether they want to or not.
That brings me back to this inflation thing.
What it really comes down to is, what kind of a society do we really want to live in? Do we want it to be one where people starve, freeze, even die because of bad luck, because of being born to a poor family in the wrong part of the country where the schools suck and jobs are scarce, because the government decided it was okay for car-makers to move production to Mexico or China, make them there and then import them back into the US without any import tax, and sell them here, because they can’t afford to see a doctor, or get a needed medical test or procedure? Do we want to say that after working for 30 or 40 years, it’s okay for their Social Security benefit check to be a lousy $1400 a month? And remember, for 43% of older Americans, that Social Security check represents at least 90% of their income. Remember too that href=”www.fool.com/retirement/general/2016/04/19/when-does-the-average-american-start-collecting-so.aspx”>45% of Americans turn to Social Security at age 62, not because they want to but because they need the money, although doing so before age 66 means foregoing over 30% in higher inflation-adjusted benefits for life, and 76% higher benefits for not waiting until age 70 (a challenge only 3% of economically struggling Americans manage to meet, and one that has become much harder since Congress removed the “file-and-suspend” option for couples).
Try working out a budget on that, and see how you do. I can’t imagine it, especially for someone living in an urban area.
I’ll give you some help. The Bureau of Labor Statistics — the same outfit that makes the estimate of what inflation has been for the year — offers the following information on average elderly expenses:
* Housing costs average $1294 a month.
* Transportation costs average $571 a month
* Food costs average $459 a month
* Entertainment averages $205 a month
* Personal insurance averages $228 a month
That all totals $2757, or more than double what we have left of our average benefit check after deducting health care expenses.
Oh, by the way, the BLS says those health care costs for the elderly average $480 a month, which is a bit more than our 20% average, but hey at this point, who’s counting?
Clearly we have a problem. Either we Americans decide we are just going to take the Lamm approach and let a lot of our elderly just die — or as is more likely — become a huge burden on their children and/or grandchildren, holding them all down from being able to get ahead in the world by, say, going to college or moving to some place where there are actually jobs. Or we decide that we are a civilized people and that we, like the people in almost every European country, and many more developed countries in other parts of the world have managed to do, are going to adequately fund their old age with a Social Security program that actually provides the security promised in its name.
We aren’t doing that now, and the current Trump/Republican government in Washington is hard at work trying to adopt Lamm’s approach of just killing the problem off by pricing medical insurance out of their reach.
Note to married readers who were born before Jan. 2, 1954:
If you are married and both born before that deadline, you can still do a kind of lesser version of the now terminated “file-and-suspend” option. It’s called a “restricted application” for Social Security spousal benefits, and it can help at least one, and maybe both financially strapped older workers in a couple hold off on collecting their benefits until they reach 70, when they can start collecting the maximum benefit to which their working years of paying FICA taxes entitles them.
Here’s the deal: If possible, the older of two married people should try to wait until 70 to perform this operation, though it can be done at 66, locking in a lower benefit check (deciding when to do this requires going through the math on different age options). Once that person is collecting benefits, the younger spouse, if also age 66, can file what is called a “restricted application” for spousal benefits. This means he or she would start receiving 50% of the other person’s level of benefits, meaning the couple will be receiving 150% of the senior retiree’s benefit amount. When the second spouse reaches 70, and can collect maximum benefits on his or her own account, she or he can switch over to that account. The difference between this method and the old file-and-suspend option is that the first person to retire in this option is locked into whatever benefit level was available at the age he or she filed for benefits. (Of course in any case benefits paid are adjusted — unfairly as described above, but adjusted in any event — for inflation each year.)
Note that this option will remain available through Jan 1, 2020 for those couples where the younger spouse still isn’t 66, but will reach that age as late as that deadline date. (Spousal benefits can be filed for at age 62, and even younger in the case of a spouse who is caring for children, but the catch is if you file for them before you’re 66 yourself, your own retirement benefit will be calculated based upon the age you filed for the spousal benefits, unlike in the “restricted application,” where your own benefit amount is calculated based on the age when you switch from spousal benefits over to your own account.)
If you have questions, go to a local Social Security office and have them explain “restricted application for spousal benefits” and to work out the different filing age calculated results for you to consider. They’ll do it, but only if you ask. Congress ruled that Social Security workers shouldn’t give advice — only answer specific questions.
Sadly, President Obama and Congress only left this option available to those born before 1/2/1954, but if you lost out but know any couple that meets that requirement alert them about this and warn them not to file for retirement early and blow the opportunity to boost their total benefit payments substantially! You should at least deserve being treated to dinner for doing so. And by the way, if this information proves helpful to you and your spouse, in lieu of lunch feel free to put a little donation in the TCBH! tip jar!)