What Does the Fiscal Cliff Debate Mean for Minnesota’s Retirement Security?

With the Dec. 31^st deadline to address expiring tax and spending cuts looming, many people across the nation and here in Minnesota are left wondering what Washington’s budget debate means for them.  Today, AARP is providing a breakdown of the impact a shortsighted budget deal could have on the health and retirement security of Minnesota seniors and their kids and grandkids.

Social Security by-the-numbers in Minnesota and what a last-minute budget deal could mean:

• 656,491 Minnesota seniors currently receive Social Security for an average annual benefit of $14,300. 
• Social Security makes up about 60% of the typical older Minnesotans income. 
• Without Social Security senior poverty in Minnesota would grow by 37%.
• Reducing Social Security Cost of Living Adjustments (COLA), which has been proposed during “fiscal cliff” negotiations, will take roughly $1.89 billion out of the pockets of Minnesota seniors over the next 10 years.   

 

“Seniors are already struggling with an inadequate Social Security COLA that doesn’t consider how much they spend on health care and how quickly those costs are rising.  Taking money out of their pockets might make the government’s bottom line look a little better, but it only hurts someone who is struggling to pay for their medicine, heat their home and put food on the table,” said Michele Kimball, AARP Minnesota State Director.  “Social Security did not cause the budget deficit and it shouldn’t be used to solve it.  Americans have worked hard to earn their benefits yet they are the ones being asked to jump off the fiscal cliff.”

 

Medicare by-the-numbers in Minnesota and what a last-minute budget deal could mean:

• Roughly 678,362 Minnesotans are enrolled in Medicare.
• The average Minnesotan on Medicare spends 17% of their total annual income, $5,200 each year, on out-of-pocket medical expenses.
• The proposal to raise the Medicare eligibility age from 65 to 67 would force a minimum of 88,322 Minnesotans to wait longer for health coverage (based on current beneficiary data).
• Minnesotans will pay an estimated $2,200* in additional costs for each year they have to wait to enroll in Medicare after they turn 65.  

 

“If we raise the Medicare eligibility age everybody loses.  Costs for those forced to wait longer would increase dramatically, premiums for those already enrolled will go up and Medicare itself will become more expensive for taxpayers,” added Kimball.  “Seniors deserve the coverage they paid for, not higher costs.”

 

*Kaiser Family Foundation study:  http://www.kff.org/medicare/med032911nr.cfm