7 Biggest Social Security and Medicare Changes in 2021

December 3, 2020 · Saving & Spending

Senior woman checking her bank balance on a smartphone. — A senior woman reviews her growing financial portfolio on a smartphone to prepare for upcoming benefit increases.

Social Security increase doesn’t account for rising senior expenses

The increase for the Social Security benefits is calculated based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers. This is a monthly measure of the wages of clerical and wage workers in urban areas. Unfortunately for seniors, the CPI-W doesn’t factor in the seniors’ actual expenses, which can be quite high. Just think of healthcare costs. If the Social Security benefits do not increase at the same pace as the prices, soon, the recipients will not be able to afford that much.

Based on a report from the Senior Citizens League, published in 2018, the Social Security beneficiaries’ ability to purchase decreased by a dramatic 34% in the last 18 years. More than that, “since 2000, COLAs increased benefits a total of just 46 percent, while typical senior expenses have jumped 96.3 percent.” According to Mary Johnson, Social Security policy analyst for the Senior Citizens League, “the flat COLAs make it more difficult for retirees to be able to afford to pay for Medicare Part B premiums, which are going up about three times faster than the annual benefit increases.”