Critics have argued for decades that the CPI-W understates the inflation of the elderly because it does not reflect how large a share of their budget goes for medical care, where prices have been rising rapidly. The elderly also tend to be hurt by the introduction of new consumer technology because they consume relatively less of these goods and do not benefit as much as the rest of the population from the initial declines in prices.
First, the government just announced that Social Security benefits will increase by 1.3% for 2021, a woefully inadequate increase according to some commentators.Second, Joe Biden’s plan for Social Security — as well as congressional Democrats’ proposed “Social Security 2100 Act” — include changing the index used for adjusting Social Security benefits.
Social Security benefits are adjusted each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers . The adjustment for 2021 is based on the increase in the CPI-W for the third quarter of 2020 over the third quarter of 2019 — producing a 1.3% increase . A modest increase tends to reignite the debate over whether the government is using the most appropriate index to adjust Social Security benefits. To address this issue, Congress in 1987 directed the Bureau of Labor Statistics to calculate a separate price index for persons 62 and older. This index, called the CPI-E, has been extended back to December 1982.
Assuming the current pattern continues to hold, I don’t think I’d go for a big fight over the price index. On the other hand, if medical care costs start to rise more rapidly again, it may be time to construct and use an index designed specifically for older Americans.
Social Security has been expanding to foreign countries & panhandlers. Its expansion will just become another National Debt. No worries , the 401K Fund will shore up the huge COLA increase.
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Hopefully the Medicare premiums will remain the same & it will be a major windfall if the benefit is say $ 10,000.00 a month
SS increases the past 2 years have not even covered my rent increases.
1.3% lol... Meanwhile my wife, my brother, and I are out of work and trying to figure out how to help my elderly parents who rely on SS. Lol 1.3%... laughable especially when the price of Medicare and prescriptions are up!!
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