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Commentary and Opinion Dec 12, 2012 - 8:11:14 AM

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


AARP’s By-the-Numbers Analysis Shows What a Last-Minute Budget Deal Could Mean for Millions of Connecticut Seniors

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The following opinion is that of the author and does not represent the opinion and views of Canaiden LLC, its associates and entities.

Hartford, CT - With the Dec. 31st deadline to address expiring tax and spending cuts looming, many people across the nation and here in Connecticut 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 Connecticut seniors and their children and grandchildren.

Social Security by-the-numbers: What a last-minute budget deal could mean for Connecticut:

In Connecticut, 472,762 seniors currently receive Social Security for an average annual benefit of $15,500. Social Security makes up about 58% of the typical older Connecticut residents income, lifting 33% out of poverty. In addition, it pumps $9.1 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 $1.42 billion out of the pockets of Connecticut 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 resident in Connecticut 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 AARP State Advocacy Director, John Erlingheuser. “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: What a last-minute budget deal could mean in Connecticut:

Roughly 492,605 Connecticut residents are enrolled in Medicare, spending 12% or $4,300 on out-of-pocket medical expenses. In 2011, Medicare spent an estimated $4.25 billion on health care services in Connecticut. The move being considered by Congress to raise the eligibility age from 65 to 67 would leave 64,752 older Connecticut residents 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 Erlingheuser. “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 forcing changes to these vital programs into a last–minute budget deal that could harm all of us.

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