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Social Security checks may get smaller

Marketplace Staff Aug 24, 2009
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Social Security checks may get smaller

Marketplace Staff Aug 24, 2009
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TEXT OF INTERVIEW

Bill Radke: The trustees who oversee Social Security say millions of seniors could see their payments shrink next year. Marketplace’s Steve Henn joins us live. Good morning Steve.

Steve Henn: Morning Bill.

Radke: Why would Social Security checks get smaller?

Henn: Well for the first time in a generation, there hasn’t been any inflation. Increases in Social Security payments are usually pegged to the inflation rate. But last year prices actually fell a bit. So, that means there’s no automatic increase in the pipeline.

Radke: So are any seniors actually getting less money?

Henn: Well, the Social Security law doesn’t allow for an outright cut in benefits. But for millions of seniors — 32 million seniors who participate in Medicare’s prescription drug program — they’re going to see their prescription drug costs, and their premiums for drugs go up a bit. So even though their Social Security check isn’t shrinking, their payments for drug coverage will rise, and they’ll end up with a few dollars less in cash each month.

Radke: OK, a few dollars. So not a huge hit?

Henn: You know it’s not a huge hit. Premiums will rise on average about $2 a month, and that’s not a huge disaster. But when you think about the fact that the average Social Security check is just over $1,100 a month — that’s not a lot of money to live on. And you know even this little reduction will make it harder for some seniors to make ends meet.

Radke: Marketplace’s Steve Henn. Thank you for that.

Henn: Sure thing.

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