2017 Projected Increases
Those individuals receiving social security benefits can expect another disappointing increase in their benefits in 2017. While this increase is another record low over the past five years, some view it as a win since social security beneficiaries failed to see any increase in their benefits in 2016, although costs of living continued to rise. The projected increase, coming at .3%, or $4 a month, was assessed by the federal government in response to adjusted costs of living.
How this Affects Elders
A large population of social security beneficiaries are elders, who rely on this monthly income in order to pay for their various costs of living, including housing, transportation, food, and extracurricular activities. Currently, social security provides $1,238 a month to its beneficiaries; thus the $50 increase in benefits a year will not make an impact on their bills. Additionally, the cost of Medicare Part B premiums is expected to go up in 2017, a healthcare service that a large population of elders who are social security beneficiaries use. In order to pay for healthcare, the government takes Medicare Part B directly out of those beneficiaries social security payments, guaranteeing that most beneficiaries will never even realize the increase in benefits given in the coming year.
How the Cost of Living Adjustment is Measured
The government bases social security costs of living adjustments using the Consumer Price Index. The issue with using the Consumer Price Index to measure adjustments in costs of living, particularly for those older adults, is that it does not take into account the inflation experienced by them. Instead, the cost of living adjustment for these older adults is based on price inflation experienced by city and clerical workers, roughly a quarter of the population. Although there was an experimental CPI index created by the Bureau of Labor Statistics, Congress has chosen to use the index measuring city and clerical workers.
The model that cost of living adjustments is based on assumes that when the cost of a product or service goes up in price, people stop buying it or just buy a similar service instead, and while that may be true for the city and clerical worker population, older adults cannot simply trade off their health care, which represents the majority of their costs. This measurement of increase is called chained CPI, a method Congress seeks to integrate in the future for the aging population, however, resistance is likely to be seen.