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What Does the Fiscal Cliff Mean for Nebraskans' Retirement Security?

Social Security Card

With the Dec. 31deadline to address expiring tax and spending cuts looming, many people across the nation and here in Nebraska are left wondering what Washington’s budget debate means for them.  Unfortunately, some in Washington are considering cramming changes to Medicare and Social Security into a year-end budget deal.

AARP is providing a breakdown of the impact a shortsighted budget deal could have on the health and retirement security of Nebraska seniors and their kids and grandkids.

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

In Nebraska, 230,834 seniors currently receive Social Security for an average annual benefit of $13,900.  Social Security makes up about 64 percent of the typical older Nebraskan’s income, lifting 35 percent out of poverty.  In addition, it pumps $4.1 billion into the state economy. Changing the way cost of living adjustments (COLA) are calculated for Social Security beneficiaries by moving to a chained consumer price index, as is on the table in debt deal discussions, cuts benefits, taking roughly $630 million out of the pockets of Nebraska Social Security beneficiaries over the next 10 years – and $112 billion for beneficiaries nationwide.   

“The current Social Security COLA already understates what an average older Nebraskan spends and purchases each month.  Assuming that most people receiving Social Security, who are already just getting by, will simply ‘trade down’ in their spending on prescription drugs, utilities and other fixed expenses for lower cost options is out of touch with reality,” said Connie Benjamin, state director for AARP in Nebraska. “Americans have worked too hard to earn their benefits to end up getting pushed over the edge in a fiscal cliff deal. Social Security is not a cause of the budget deficit and it shouldn’t be used to solve it.”

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

Roughly 240,273 older Nebraskans are enrolled in Medicare, spending $3,500 on average for out-of-pocket medical expenses. In 2011, Medicare spent an estimated $1.71 billion on health care services in Nebraska.  The move being considered by Congress to raise the eligibility age from 65 to 67 would leave 27,766 Nebraskans without health coverage (based on current beneficiary data), forcing them into the private insurance market, which is estimated to cost them an additional $2200 per year*. And, removing the youngest and healthiest older Americans from the Medicare risk pool will increase premiums for those remaining in the program.

“Raising the Medicare eligibility age would dramatically increase costs for recently retired and soon-to-retire seniors, drive up premiums for those enrolled in Medicare and increase overall health care costs,” added Benjamin. “Seniors deserve guaranteed coverage, not higher costs.”

“Americans have worked too hard to earn their benefits to end up getting pushed over the edge in a fiscal cliff deal. Social Security is not a cause of the budget deficit and it shouldn’t be used to solve it.” “Americans have worked too hard to earn their benefits to end up getting pushed over the edge in a fiscal cliff deal. Social Security is not a cause of the budget deficit and it shouldn’t be used to solve it.”

*See Kaiser Family Foundation study

[Photo credit: Donkey Hotey/Flickr]

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