The top regulatory/policy story wasn’t Reg BI, fiduciary rule, CARES, or PPP. It wasn’t really regulation or policy-related at all. It was “Final 2021 Social Security COLA Prediction.”
To add to its offbeat nature, it wasn’t the announcement of the COLA increase itself, but simply the predicted increase that fueled reader interest. From social media interaction about the story, they had plenty to say, mostly negative. In a time of pandemic especially, they said, it simply wasn’t enough.
A 1.3% cost of living adjustment (COLA) in 2021 was the prediction, which was spot on; 1.3% was the increase when officially announced in mid-October, making it the second-lowest ever, according to The Senior Citizens League (TSCL).
It was a lower increase than 2020’s 1.6% increase and marks the fifth time since 2010 that there will be an extremely low, or even no, annual inflation adjustment.
While it is bigger than those in some recent years (in 2010, 2011, and 2016, the COLA was 0% and in 2017, it was 0.3%), it is much smaller than the 2.8% increase in 2019. The average COLA from 2010 to now has been 1.4%, much less than the 3% average annual increases between 1999 and 2009.
“People who have been receiving benefits for 12 years or longer have experienced an unprecedented series of extremely low cost-of-living adjustments,” Mary Johnson, a Social Security policy analyst for The Senior Citizens League (TSCL), said at the time.
She added that the adjustments did not account for rapidly rising Medicare Part B premiums that are increasing several times faster than the COLA. The situation is causing those with the lower Social Security benefits to see little growth in their net Social Security income after deduction of the Part B premium.
Possible COLA help
Some in Congress heard the outcry. Reps. Peter DeFazio, D-Ore., and John Larson, D-Conn., proposed emergency legislation in October to increase the 2021 COLA to 3%. Congress has yet to act on the bill, however, even though Democrats control the House.
“Due to the COVID-19 pandemic, seniors are facing additional financial burdens in order to stay safe,” DeFazio said in a statement. “This absolutely anemic COLA won’t even come close to helping them afford even their everyday expenses, let alone those exacerbated by COVID-19. Raising the COLA to 3% for 2021 will provide seniors with an immediate, crucial lifeline during the ongoing coronavirus crisis.”
“Social Security is our country’s number one financial security program, and, because of the COVID-19 pandemic, people are depending on it now more than ever,” Larson added. “Seniors are seeing a rise in food, medical, housing costs, and more, and a 1.3% cost of living adjustment (COLA) is just not enough during these difficult times.”
Both mentioned their sponsorship of the Social Security Expansion Act, “to increase benefits and use a new COLA index (CPI-E) to factor in seniors’ actual, everyday expenses.”