Social Security Rates in 2016: The Good and The BadUpdated: March 12, 2016
Social Security profoundly affects millions of Americans and the cost is astronomical. In fact, the Social Security Administration reports that in fiscal year 2016, they will pay out one trillion dollars in benefit payments.
Along with this cost, the Administration mentioned a few noteworthy items within their budget request pertaining to Social Security for (FY) 2016:
1. The number of disability appeals hearings pending will be reduced. A record number of hearings will be completed thus, decreasing the amount pending. However, reduced processing times will not be feasible until fiscal year 2017.
2. An effort will be made to increase the reduction of improper payments; combat fraud, waste and abuse; and invest in efforts which will enable the SSA to provide more modern, efficient service.
3. The 2016 fiscal year budget request level will help SSA build upon their current progress. It will allow them to accomplish their goals that they are currently focusing on during the 2014-2018 Strategic Plan which includes:
- Enhancing service delivery through innovation and collaboration
- Handling a record number of retirement claims
- Improving national 800 number service
- Increase number of processed disability appeals
- Reduce hearings backlogs for the future
- Employ video technology for interpreter services and face-to-face services to remote and rural areas
- Strengthening the integrity of the SSA programs
- Continue a reduction of improper payments and fraud
- Decrease the Continuing Disability Reviews (CDR) backlog
- Focusing on quality and efficiency for the disability program
- Invest in quality improvements that will allow SSA to make right decisions at the right time
- Continue to reduce improper payments
- Invest in the SSA employees
- Investing in training opportunities allowing the employees to gain knowledge and tools necessary for their work
- Continuing to foster an inclusive culture that promotes well-being of employees
- Continuing to maintain safe and secure technology services
- Information will continue being accessible to a broad population
- Online services will continue to be secure and easy to use
- A robust IT operation will be maintained which allows the support for large demands of the Social Security program and other government programs
There will not be a cost-of-living increase this year, which is due to a calculation figuring the increase and/or lack of increase for benefits. This calculation is done by the SSA, which takes an average from the Consumer Price Index for July, August, and September. The average is then compared to the number from the previous year. The end result is the percentage to which Social Security benefits are adjusted. This is referred to as the Cost of Living Adjustment (COLA).
It is important to remember that COLA cannot be reduced to an amount less than what the Veteran or the survivors were receiving at the effective date of allowance. In other words, this means that the beginning allowance amount will be guaranteed for life at a minimum. Although 2016 COLA is not changing because of recent estimates, the lack of increase this year can be challenging for recipients because retirees have already had to adjust to minimal cost of living increases in their benefits over the past years.
Usually, the CPI will increase from year to year, and as a result, COLA adjustments are applied as “increases” and Social Security payments will then increase. However, it is possible for the COLA adjustment to be applied as a “decrease” if the CPI decreases from one year to the next.
Unfortunately, the cost of living will most likely always rise. And although Social Security payments will not decrease, it still may be financially straining not to have the increase many were hoping for. That’s why it is beneficial to effectively budget for the year ahead without including an increase in Social Security, considering it does not always rise.