No COLA, No Luxuries

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Pam Linn

For only the third time in 40 years, there will be no cost-of-living adjustment (COLA) for our Social Security checks in 2016. While previous raises were small (usually less than four percent), they were always welcome.

But there’s more to it than that. Inflation may be nonexistent to the feds, but in local grocery stores, it is a living, breathing reality. Food prices are rising almost weekly. Clothing prices — barring promotional sales — are rising, too. Housing costs have rebounded after the financial meltdown and now exceed what workers earning wages that haven’t risen can afford.

About the only thing that’s lower is gasoline. And while that makes drillers whine, the average driver is seeing huge savings at the pump and those who have to drive long distances to get to work are reaping the reward.

Social Security is financed by a 12.4 percent tax on wages up to $118,500, with half paid by workers and the other half paid by employers. The amount of wages subject to Social Security taxes usually goes up each year. But because there is no COLA, it will remain at $118,500, according to an article by the Washington Associated Press.

Most benefit recipients have yet to be notified directly by the agency, and for those of us who are retired or living on fixed incomes, the news is not promising. Living on one’s Social Security benefit (the average monthly payment is $1,224) can be quite a challenge. 

And for those who hoped to augment that benefit with the interest on their savings, there isn’t any. The Federal Reserve, which adjusts interest rates to keep inflation from rising, has kept such a tight hold on those rates for the past decade that we’ve had to spend our capital just to exist.

To be fair, low interest rates are a boon to young people. They’re encouraged to buy cars, household appliances and all the things young people need to begin their new lives. It’s true that higher inflation might encourage them to buy now to avoid rising prices. They are also encouraged to borrow at low interest rates. But isn’t that one of the elements that spurred the meltdown? Think, liar’s loans and greedy mortgage brokers.

For reasons not all of us understand, Medicare deductibles and premiums are set to spike.

Most Social Security beneficiaries have Medicare premiums deducted directly from Social Security payments, and the annual COLA usually covers any rise in premiums. When that doesn’t happen, a long-standing federal “hold harmless” law protects the majority of beneficiaries from having their Social Security payments reduced, according to the AP article.

However, about 30 percent of those on Medicare may see an increase in Part B premiums that would otherwise be spread among all. Those who would pay the higher premiums include new beneficiaries, those whose Medicare premiums aren’t deducted from Social Security payments and those with higher incomes. All Medicare beneficiaries would see an increase of $76 in annual deductibles to an estimated $223.

Congress could fix this but we all know how well that’s been working out. Senate Democrats have introduced legislation that would freeze Medicare’s Part B premiums and deductibles for 2016 and the Obama Administration is working to stave off increases to Medicare costs. We’ll see what transpires, if anything.

Meanwhile, once again, I’m slashing my living expenses. I’ve done it so many times over the years that I’m actually getting pretty good at it. First to go was my landline. That’s the phone whose number has been sold on various lists so many times that it’s become more of a nuisance than a convenience. Since then, my life has become blissfully quiet. I no longer have to lie to callers wanting donations and scammers who want to fix my computer. I’ve discovered why so many people have only their cell phones these days.

Then, I cancelled or failed to renew all of my subscriptions. I share the New Yorker, The Week and Scientific American with fellow residents who still subscribe. I also gave up my seat at the symphony because the Bose radio still works and I’ve got a lot of CDs.

Now I’m down to my last extravagance — the Subaru Outback. Even though gas is dirt cheap these days, car insurance, garage fees, tire changes (Blizaks for winter, All Weather for summer), registration and AAA membership really add up. 

Trouble is, I planned to give the car to my granddaughter in a couple years when she gets her license and nobody seems to have cheap garage space. Interest, inflation and COLA or not, gas prices could rise again.