What Does the Fiscal Cliff Debate Mean for New Yorkers' Retirement Security?

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Dec 03, 2012, 09:24 ET

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

NEW YORK, Dec. 3, 2012 /PRNewswire-USNewswire/ -- With the Dec. 31^st deadline to address expiring tax and spending cuts looming, many people across the nation and here in New York 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 New York seniors and their kids and grandkids.

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

In New York State, 2.4 million seniors currently receive Social Security for an average annual benefit of $14,600. Social Security makes up about 58% of the typical older New Yorker's income, lifting 32% out of poverty. In addition, it pumps $45.6 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 $7 billion out of the pockets of New York 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 New Yorker 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 David McNally, Senior Manager of Government Affairs for AARP in New York. "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 New York and what a last-minute budget deal could mean:

Roughly 2.5 million New Yorkers are enrolled in Medicare, spending 12%, or $3,500 on out-of-pocket medical expenses. In 2011, Medicare spent an estimated $18 billion on health care services in New York. The move being considered by Congress to raise the eligibility age from 65 to 67 would leave 331,713 New Yorkers 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 McNally. "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.

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

AARP is a nonprofit, nonpartisan organization with a membership that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for 50+ Americans and the world's largest-circulation magazine with over 35.1 million readers; AARP Bulletin, the go-to news source for AARP's millions of members and Americans 50+; AARP VIVA, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website, AARP.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

SOURCE AARP New York