Strategies for Lack of COLA in 2016

Without a COLA this year, some people may need to adjust their spending. Although inflation was 0% for the past year, it was mainly due to the decline in energy prices. Other costs were up however, including food, shelter and medical care, so cutting back on spending in these areas might be one way to help recipients make ends meet. Since housing represents an average of 33.9% of annual expenses, older Americans may look to downsize or explore home sharing. Considering some ways to boost income, seniors may consider investing more aggressively in perhaps more risky assets. Some may go back to work, or if working, work more hours.

For the 30% of Medicare beneficiaries in the category who will have to pay a higher Medicare Part B Premium, writing to their representatives and researching political candidates on their position on Social Security and Medicare benefits would lead them to voting most appropriately. Starting and stopping Social Security benefits is another way to avoid the increase in the Medicare Part B Premium for 2016. Reinstating for November and December and then suspending benefits again in January 2016 could be done in the same request.

Lawmakers want the Social Security Administration to change the calculation of the COLA, from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Experimental Consumer Price Index (CPI-E), an experimental inflation index designed to measure cost-of-living for the elderly, to better reflect the spending patterns of older Americans. Currently, inflation is understated for older Americans and does not reflect their spending patterns, according to a study by Alicia Munnell and Anqi Chem of the Center of Retirement Research at Boston College.


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