Fact: Social Security costs are rising and the federal government can no longer sustain it. Senior citizens approaching retirement wonder whether they will be prepared to tackle day-to-day expenses.
A CNN report cites that healthcare prices increased by 2.4% in the past year, a concern largely felt by senior citizens more so than their younger counterparts. Furthermore, CNN states that Social Security benefits will only increase by 1.5% in the coming year.
The Obama administration’s proposed budget plan covers the elderly, persons with disabilities and veterans. And yet, the new measurement to inflation from this new budget plan, “chained CPI”, will undoubtedly reduce Social Security benefits.
Chained CPI avoids overstating consumer price growth, consequently unforgiving for recipients of Social Security since healthcare increases quicker in comparison to inflation.
Coupled with ‘the retirement crisis’, the new budget plan is not appealing to those looking to rely on Social Security benefits. The Huffington Post reports, “According to the Employee Benefit Research Institute’s 2013 Retirement Confidence Survey, 57 percent of households reported that they had less than $25,000 in retirement savings, including 28 percent with less than $1,000.”
Critics, such as activists from MoveOn.org do not agree with the effects to Social Security that the new budget plan proposes. Others suggest amendments that would help those vulnerable to receiving decreased benefits. Economists from The Center on Budget and Policy Priorities, for example, propose targeting specific programs to the chained CPI measure as oppose to a blanket measurement that disregards the negative effects to, particularly, Social Security.
There will be a Senate committee to discuss “The Role of Social Security, Defined Benefits, and Private Retirement Accounts in the Face of the Retirement Crisis” on December 18, 2013.
CNN Money, http://money.cnn.com/2013/10/30/news/economy/social-security-benefits/
CNN Money, http://money.cnn.com/2013/04/10/news/economy/chained-cpi-social-security/index.html?iid=EL
Huffington Post, http://www.huffingtonpost.com/jane-white/why-the-denial-about-the-retirement-crisis_b_4426123.html
The U.S. Senate, http://www.finance.senate.gov/hearings/hearing/?id=e6f377e0-5056-a032-5232-ebdc7d54d21f