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Social Security checks will increase next year, but for retired staffing contractor Lou Scrivani, 76, the increase won’t even be enough to cover increased health care costs, let alone the inflated prices of everything else last year.
Starting in January, more than 66 million program beneficiaries will receive a 3.2% cost of living adjustment (COLA), an average surcharge of more than $50 per month.
COLA is designed to help Americans keep up with inflation so they can maintain their standard of living year after year. But the hikes aren’t enough, many seniors say. According to The Senior Citizens League, a nonprofit that advocates for older adults, the cost of items that older adults spend most of their money on consistently exceeds COLA. The biggest cost factor is healthcare.
Even with COLA, “we won’t have enough net gains to keep up with current inflation,” said Scrivani, who lives in Delaware.
Show me the math
This is how Scrivani calculates for himself and his wife:
Total monthly COLA increase for both: about $135.
FEWER:
- Medicare Part B monthly increase: about $10 x 2 = $20
- Drug plan increase: $25.70 x 2 = $51.40
- Medicare supplement increase: $10 total
That means the Scrivanis keep about $53.60 of the $135 monthly COLA increase. However, the deductible for her medication increased by $60.
“So goodbye, $53 increase,” Scrivani said. “With the current inflation rates, we are in negative territory overall.”
And this example only leads to higher healthcare costs. When you factor in more expensive housing, food, gas and utilities, the bleeding gets worse, and older adults must hope their savings can cover the difference, experts and seniors say.
But that doesn’t always happen.
Poverty among Americans age 65 and older has increased three years in a row, from 10.7% in 2021 to 14.1% in 2022, according to the latest Census Bureau data.
“We have a problem, a lot of people are feeling it,” said Kris Whipple, partner and financial advisor at Kristopher Curtis Financial in Nashville, Tennessee. “So I jump to what can be done? What can I do? Plan accordingly.” “
Do Americans have enough savings to cover additional costs each year?
Unlikely.
The Senior Citizens League said more than a quarter of the 1,055 adults it surveyed in the first three months of the year had depleted their retirement accounts in the past 12 months. That was up from 20% in the second half of last year.
And a record 45% said they were in credit card debt for more than 90 days even as interest rates skyrocketed, the league said.
“The concern that retirement income will not be enough to cover the cost of essentials in the coming months is a major concern,” Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League, said in a statement last month Explanation.
Will healthcare costs become cheaper?
Many savings measures from the Inflation Reduction Act will not come quickly.
This year, only the $35 monthly insulin cap and recommended free adult vaccines went into effect for Medicare Part D enrollees.
Price negotiations with pharmaceutical companies for 10 drugs have begun this year, but “most, if any, savings will not be visible to anyone on any drug until about 2026,” Scrivani said.
Starting January 1, deductibles of $8,000 or more (including certain payments made by other people or entities on your behalf) will automatically grant you “catastrophic coverage” so you won’t have to pay a drug copay or coinsurance, who fall under insurance coverage Part D for the remainder of the calendar year.
A $2,000 annual prescription drug out-of-pocket cap is also not expected until 2025.
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What do seniors do to conserve their health budget?
The cost of medications is so high that many seniors order from Canadian pharmacies and pay a fraction of U.S. prices.
Scrivani takes Xarelto to prevent strokes. With his insurance and copay, a 30-day supply costs $550. Using GoodRx, a free online price comparison platform for prescription drugs, he paid between $528 and $567 depending on the pharmacy, or nearly $7,000 a year out of pocket.
These prices led him to conduct extensive research to find cheaper medications. The Canadian government and the U.S. Food and Drug Administration provide tips for finding pharmacies online or abroad, and some people consult People’s Pharmacy for consumer drug information or check the Canadian International Pharmacy Association’s list of verified pharmacies.
Scrivani said he has significantly reduced his costs by using a Canadian pharmacy. His drug is shipped from Turkey, and he is receiving a three-month supply this year for $119, or $49 a month, compared to $550 a month from the U.S. pharmaceutical company that licenses to sell the drug is.
“This is the state of health care for seniors in this country,” he said.
In extreme cases, Whipple said some people are even moving to Texas, California or Arizona so they can easily cross the border into Mexico to buy supplies. While he understands why people would do this, he and other financial experts say it’s better to work on your financial plan earlier in life.
said Morgan D. Hill, chairman of wealth management firm Hill & Hill Financial. “You have to budget a third of your income for medical costs.”
Overall, what resources can seniors use to help them right now?
If you are already in your middle age, here are some ways to find help:
- Use BenefitsCheckUp.org to find local assistance programs for everything from food, medications to utilities, or call the toll-free hotline at 1-800-794-6559, Monday through Friday, 8 a.m. to 7 p.m. ET.
- For help with Medicare and Medicaid, check out State Health Insurance Assistance Programs or call 1-877-839-2675.
- Visit or call your local social services office if you do not have a computer or internet access. This enabled Bick Adams, 69, of Saltville, Virginia, to raise $23 a month from the Supplemental Nutrition Assistance Program (SNAP) a few months ago. “It’s like milk and bread and maybe a dozen eggs,” he said.
Adams, whose wife, Cheryl, 64, has cancer, also learned they were eligible for Limited Medicaid, which he hopes will help pay some of the bills this month.
The telephone application takes a long time, but “we’re lucky. Of course I can’t go to a ballgame and I could use a hearing aid, but we have warmth and food and are grateful. We’re just old people looking after each other.”
Medora Lee is a money, markets and personal finance reporter for USA TODAY. Reach her at [email protected] and sign up for our free Daily Money newsletter every Monday through Friday for personal finance tips and business news.