By Sandy Fitzgerald
The Social Security Administration’s plans to increase recipients’ benefits by 5.9% next year could lead the Social Security Trust fund to run out of money by 2032, one year ahead of previous estimates, according to Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.
“The trajectory for Social Security was already an incredibly troubling one,” MacGuineas commented, according to a report published on NBC Montana. “When you have a big bump up like this that means that spending is going to be higher, not just this year, but all years going forward.”
The upcoming increases, which will start in 2022, are the largest since 2009, when retirees got a 5.8% increase. In other years over the last decade, low inflation has brought increases of less than 2% a year. The 2022 increase is also the largest cost-of-living adjustment (COLA) since 1982.
If inflation causes workers paying into the program to earn higher wages, Social Security may not be in trouble, but if the wages don’t increase, Social Security could face insolvency sooner than expected.
“[There are] a lot of challenges and a Congress that only seems to agree on doing nothing to reform and strengthen the program,” MacGuineas said.
Meanwhile, Social Security is the largest item in the federal budget, with the United States spending $1.135 trillion this fiscal year, resulting in one-third of all mandatory spending.
Those costs will only increase in upcoming years, as payouts increase and more Americans reach retirement age.
The upcoming pay bumps will mean larger checks starting in January. For example, retirees earning $1,565 a month last year will get $1,657 this year.
The adjustment comes after the Bureau of Labor Statistics announced data showing the continued rise of the price of consumer goods, including prices up overall by 5.4% for the year, including the price of groceries up by 4.5%, and energy costs climbing 25%.
The Senior Citizens League, a nonpartisan advocacy group, says it has gotten hundreds of emails in the past month from older Americans who are unable to pay their bills. It estimates that Social Security recipients have seen their buying power cut by as much as one-third since 2000, and the situation will get worse, said Mary Johnson, a policy analyst for the organization.
“It appears that inflation is not done with us yet, and the buying power of Social Security benefits may continue to erode into 2022,” she said.
For one in four older Americans, Social Security benefits represent at least 90% of their total income.