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Senior Groups: COLA Raise Generous, But Not Life Changing

Indiana seniors receiving Social Security will get about $468 more next year. (emiliaclark10/Morguefile)
Indiana seniors receiving Social Security will get about $468 more next year. (emiliaclark10/Morguefile)
November 8, 2018

INDIANAPOLIS – The cost-of-living increase or COLA that takes effect next year for people on Social Security will be the most generous in seven years, but it's still mostly grocery money and not a trip to the beach.

The average Indiana recipient collects more than $1,400 a month from Social Security, so with the increase, the typical senior is looking at about a $40 monthly boost, or $468 per year.

Mary Johnson, Social Security and Medicare policy analyst with the nonprofit group Senior Citizens League, says this is the largest COLA increase since 2012.

"And there have been three years when there was no cost-of-living adjustment at all,” she points out. “And in 2017, it was only three-tenths of a percent, or almost zero."

Johnson says people who receive less than $600 in Social Security income won't see any net increase in their benefit.

More than 62 million people collect Social Security in the United States, including nearly 900,000 retirees in Indiana.

Johnson says the low cost-of-living increases are concerning, because those who depend the most on this income are losing significant buying power over the years.

"Since the year 2000, Social Security benefits have lost about 34 percent of their buying power, and that has really big implications for anybody trying to live on Social Security if they don't have lots of savings," she states.

Johnson says people often underestimate how much money they'll need to live on in retirement, and end up spending their savings faster than they planned, or going into debt by taking out a second mortgage.

Health care and high medication costs often are to blame. She adds that seniors in rural areas often face the greatest challenges.

"A lot of people simply did not have the type of job where they had the opportunity to have a 401(k) or to save,” she states. “And 60 percent of retirees are dependent on Social Security for over half of their income."

Indiana is one of 37 states that does not tax Social Security benefits. Lawmakers continue to work on solutions for the COLA to better keep up with actual inflation rates.

Mary Kuhlman, Public News Service - IN