Social Security Boost Falls Short as Medical Bills Surge – In One Hand Out the Other!

The recent announcement of the Social Security cost-of-living adjustment has left some seniors concerned about the adequacy of the figures. There is growing concern that the current adjustments may not be sufficient, highlighting the need for attention to address potential issues with the system.

Incremental Boost

Image Credit: Shutterstock / Andrey_Popov

In January, older Americans will experience a 3.2% increase in their Social Security payments. The average beneficiary stands to gain an additional $54 per month.

Intended Purpose

Image Credit: Shutterstock / Prostock-studio

This annual adjustment aims to counterbalance the rising costs of essential items such as groceries and fuel. The rate is derived from the Bureau of Labor Statistics’ consumer data.

Previous Comparisons

Image Credit: Shutterstock / Denys Kurbatov

Though framed as an aid, this year’s adjustment is lower than the previous year’s. Official metrics indicate that consumer prices have not surged as drastically as they did earlier, creating the basis for a smaller increase.

The Medicare Offset

Image Credit: Shutterstock / Valeri Luzina

Contrary to the promise of increased monthly income, rising Medicare premiums are set to absorb much of the new adjustment. The standard monthly premium for Medicare Part B will rise by approximately 6%.

Escalating Healthcare Costs

Image Credit: Shutterstock / ABUN5M

Seniors and disabled individuals frequently allocate a significant part of their incomes to healthcare.

As medical costs continue to surge at a pace faster than general inflation, these demographic groups face an increasingly strained budget.

Program Overview

Image Credit: Shutterstock / J.J. Gouin

The Social Security system annually disburses around $1.4 trillion, benefitting over 71 million people, including low-income and disabled individuals.

Funding Mechanism

Image Credit: Shutterstock / Aleksandr Grechanyuk

Income taxes from current employees finance the Social Security program. Excess collected funds are deposited into the Social Security trust fund for future beneficiaries.

Benefit Calculation

Image Credit: Shutterstock / voronaman

The government determines individual Social Security benefits through a formula that considers 35 years of top earnings and adjusts based on the age at which benefits are claimed.

A Flawed Benchmark

Image Credit: Shutterstock / Wanan Wanan

There are criticisms that the Consumer Price Index, utilized to calculate the COLA, inadequately accounts for the specific spending trends of seniors, particularly in healthcare.

Financial Strains Unique to Seniors

Image Credit: Shutterstock / Goksi

Essential costs like healthcare, prescription drugs, food, shelter, and energy constitute unavoidable financial pressures for seniors, exacerbated by their often fixed incomes.

A System Stressed by Demographics

Image Credit: Shutterstock / fizkes

The Social Security system is increasingly strained due to a declining young workforce and a surge in retiring Baby Boomers, leading to fewer incoming funds.

Trust Fund Solvency Risks

Image Credit: Shutterstock / Pla2na

Current projections indicate that the Social Security trust fund will be exhausted by 2033. At that point, only 77% of scheduled benefits will be payable.

Consequences of Inertia

Image Credit: Shutterstock / fizkes

Failure to address the declining state of the trust fund could result in an abrupt 20% cut in benefits, severely affecting millions of seniors.

Legislative Paralysis

Image Credit: Shutterstock / Andrey_Popov

While the necessity for reform is widely accepted, political hesitance to make unpopular but necessary changes leaves the issue unresolved.

The Importance of Personal Financial Planning

Image Credit: Shutterstock / fizkes

In this uncertain climate, seniors and those nearing retirement should explore supplementary savings plans and alternate income streams to mitigate the challenges ahead.

Minimal Relief

Image Credit: Shutterstock / fizkes

The recently announced cost-of-living adjustments offer minimal relief to seniors grappling with escalating living and healthcare costs.

As the Social Security system faces impending insolvency, urgent reforms and individual financial preparedness are imperative to avert a deepening crisis.

“America only has ONE NATIONAL ANTHEM”: Fans Outraged After Black National Anthem Is Sung at Super Bowl LVII Instead of American National Anthem

Image Credit: Shutterstock / sirtravelalot

The NFL’s decision to include the performance of “Lift Every Voice and Sing,” often referred to as the “Black National Anthem,” at the opening of Super Bowl LVII has sparked severe online controversy. Here’s the full story. “America only has ONE NATIONAL ANTHEM”: Fans Outraged After Black National Anthem Is Sung at Super Bowl LVII Instead of American National Anthem

“Karma Strikes Back” – Russia Faces Its Largest Attack on Home Soil Since the War Began

Image Credit: Shutterstock / Harold Escalona

Reports of drone attacks on Russian soil by the Ukrainian forces have escalated to the largest cross-border attack since the war started, with the important airport in Pskov becoming the latest victim. “Karma Strikes Back” – Russia Faces Its Largest Attack on Home Soil Since the War Began

“Texas Is Doomed” – Federal Judge Delivers a Controversial Verdict, Gov. Greg Abbott Accused of Breaking the Law in Latest Legal Showdown

Image Credit: Shutterstock / Carrington Tatum

A federal judge has ruled that Texas governor Greg Abbott violated federal laws in his fight to keep Mexicans out. Now, the Republican may be up a creek without a paddle. “Texas Is Doomed” – Federal Judge Delivers a Controversial Verdict, Gov. Greg Abbott Accused of Breaking the Law in Latest Legal Showdown

They “Boxed All of the Black Children Together” – Florida Principal Threatens High-Achieving Black Student With Jail Time if Test Scores Don’t Improve

Image Credit: Shutterstock / fizkes

Bunnell Elementary School’s new principal, Donelle Evensen, attempted a unique strategy to address academic performance concerns, but it backfired spectacularly, sparking outrage and accusations of racial insensitivity. They “Boxed All of the Black Children Together” – Florida Principal Threatens High-Achieving Black Student With Jail Time if Test Scores Don’t Improve

Florida’s COVID Hospitalizations Soar as DeSantis Administration Urges People Under 65 Not to Get Newly Approved Boosters

Image Credit: Shutterstock / Leonard Zhukovsky

Florida’s Covid-19 hospitalizations have surged to a post-pandemic record. Amid this crisis, Governor Ron DeSantis and his surgeon general’s controversial warning against COVID-19 booster shots has sparked intense debate and concern within the medical community. Florida’s COVID Hospitalizations Soar as DeSantis Administration Urges People Under 65 Not to Get Newly Approved Boosters

The post Social Security Boost Falls Short as Medical Bills Surge – In One Hand Out the Other! first appeared on Mama Say What?!

Featured Image Credit: Shutterstock / gpointstudio. The people shown in the images are for illustrative purposes only, not the actual people featured in the story.

+ posts

Mark Garro is an Aussie former CPA and corporate finance manager turned research writer. After more than two decades simplifying complex analyses for leading companies, including Goldman Sachs, Marks & Spencer, and Tabcorp, he packed up and moved to the Italian Riviera. Now he covers all things related to finance and equity research for a diverse range of publishers and syndicators around the world.