This according to a new study released by AARP last week that highlights the impact of the economic recession on Social Security recipients.
“Of those surveyed in AARP Closer LookSM, more than a quarter (27 percent) of individuals age 45 to 64, as well as 38 percent of African Americans and nearly half (43 percent) of Hispanics, report that they still have problems paying for essential items such as food and utilities,” states a release that summarizes the study. “In addition, 41 percent surveyed, including over half of African Americans (53 percent) and nearly three-fourths of Hispanics (71 percent) surveyed, were not confident that they would have enough money to cover medical and living expenses in their retirement.”
And things will only get worse as those who are Social Security beneficiaries will see no cost of living increases for the first time ever, the group argues.
Data shows that medical prices have risen during 2009, and Medicare beneficiaries with higher than average health care costs are hardest hit by not having a Cost of Living Allowance increase (COLA) next year.
“Seniors face rising costs, but today have fewer resources to pay for them,” John Rother, AARP’s Executive Vice President for Public Policy and Strategy, said in a statement. “We urge Congress to address this issue quickly, so that seniors will not face reductions in their Social Security checks, or at least be compensated for increasing medical costs so vital to their well being.”
According to AARP's “Closer Look” survey, more African-Americans and Hispanics reported having problems paying rent or mortgage and having problems paying for essential items such as food and utilities such as electricity, heat and the water.
Also, fewer African-Americans and Hispanics than Whites reported being confident in their ability to handle potential expenses related to health care.
AARP expects that, for the first time since it was established in 1975, there will not be a Social Security COLA next year. Because of COLA, Social Security checks have gone up automatically every year since 1975, according to website Factcheck.org.
They report that COLA will not be increased this year and possibly next because the “official measure of the cost of living has gone down, not up” due mainly to the decreased price in oil from the previous year. It's a reverse to what happened in last year when oil prices went through the roof and Social Security beneficiaries enjoyed the largest COLA increase in 27 years at 5.8 percent.
While the cost of goods and services fell, the cost of medical care rose by 3.3 percent, according to the Bureau of Labor Statistics. And, according to AARP's director of economic security Christina Martin Firvida, seniors spend on average 30 percent of their income on health care related expenses.
“Retirees, especially those with low and modest incomes who depend on those social security as their main or their only source of income in their retirement,” Martin Firvida said. “For those folks not getting a cost of living increase next year with their health care cost continuing to rise and other asterisks of the economy continuing to be difficult is something that is unique to them and making it more difficult to make ends meet.”
In a letter to congressional leaders, AARP CEO Barry Rand called on House and Senate leaders to provide $250 in emergency relief to millions of older Americans who are struggling in this economic climate.
“On behalf of our 40 million members nationwide, AARP would like to express our strong support for providing America's seniors with $250 in emergency relief as the appropriate legislative response to the projected lack of a Social Security cost-of-living adjustment (COLA) in 2010,” wrote Rand in his letter addressed to House Speaker Nancy Pelosi (D-Calif.), House Minority Leader John Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.), and Senate Minority Leader Mitch McConnell (R-Ky.)
“Seniors spend a disproportionate share of their income (about 30 percent on average) on health care costs, which continue to increase well above the rate of overall inflation. The combination of higher health care costs, including prescription drug prices, and a stagnant Social Security benefit is particularly troubling and will result in lower net Social Security payments to millions of America’s seniors in January 2010.”
Martin Firvida said that since there will be no cost of living allowance increase AARP is advocating for a relief payout of $250 to be coupled with assurances that Medicare premiums will not go up.
The senior lobby seems to feel that the best way to address the needs of struggling seniors with fixed incomes is to give them a sort of a government-funded monetary stimulus.
“We supported the stimulus earlier this year precisely because we believed the economy needed that boost and individuals who received that relief needed a little help,” said Firvada, “And we think that the circumstances for retirees are still pretty tough and that it's still a good idea to maybe give them relief for another time next year.”