What Does the Fiscal Cliff Debate Mean for Illinoisan's Retirement Security?
AARP's By-the-Numbers Analysis Shows What a Last-Minute Budget Deal Could Mean for Millions of Illinois Seniors
CHICAGO, Dec. 4, 2012 /PRNewswire-USNewswire/ -- With the Dec. 31st deadline to address expiring tax and spending cuts looming, many people across the nation and here in Illinois 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. Today, AARP is providing a breakdown of the impact a shortsighted budget deal could have on the health and retirement security of Illinois seniors and their children and grandchildren.
Social Security by-the-numbers in Illinois and what a last-minute budget deal could mean:
In Illinois, 1,475,030 seniors currently receive Social Security for an average annual benefit of $14,500. Social Security makes up about 62% of the typical older Illinoisan's income, lifting 37% out of poverty. In addition, it pumps $27.9 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, would cut benefits, taking roughly $4.33 billion out of the pockets of Illinois Social Security beneficiaries over the next 10 years – and $112 billion from beneficiaries nationwide.
"The current Social Security COLA already understates what an average older Illinoisan spends and purchases each month. Assuming that most individuals 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 Bob Gallo, AARP Illinois State Director. "Americans have worked too hard to have their benefits hijacked by 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 Illinois and what a last-minute budget deal could mean:
Roughly 1,571,429 Illinoisans are enrolled in Medicare, spending 13%, or on average $3,700 on out-of-pocket medical expenses. In 2011, Medicare spent an estimated $1.21 billion on health care services in Illinois. The move being considered by Congress to raise the eligibility age from 65 to 67 would leave 205,163 Illinoisans without health coverage (based on current beneficiary data), forcing them into the private insurance market, which is estimated to cost them an additional $2,200 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 Gallo. "Seniors deserve guaranteed coverage, not higher costs."
AARP looks forward to working with legislators on both sides of the aisle on proposals that strengthen Social Security and Medicare for all generations, but not by cramming changes to these vital programs into a last–minute deal that could harm all of us.
Visit earnedasay.org to get the facts – both pros and cons – on the options being discussed in Washington for Social Security and Medicare, and to make your voice heard on what you think should be done to protect the future of Social Security and Medicare for current and future beneficiaries.
*Kaiser Family Foundation study: http://www.kff.org/medicare/med032911nr.cfm
SOURCE AARP Illinois