Anyone who works closely with reverse mortgage borrowers will realize how indispensable Social Security and Medicare are to this group. Since 1975 when Congress added Cost of Living Adjustments to Social Security benefits, these “COLA” increases have averaged 4.2% annually. Up until 2010, there were increases every year. During the difficult economic time from 1979 to 1981, these COLA increases averaged 11.8 percent. In 2010 & 2011, there were no COLA increases. While interest rates may have been low and some measures of inflation were relatively low during these two years, food prices, gas, and medical costs increased each year.
Despite what the Social Security COLA says, many of our reverse mortgage borrowers and their families point out that their dollars don’t go as far as they used to. Fortunately, starting this month, there will be a 3.6% increase in Social Security benefits.
Other good news for our reverse mortgage population is that Medicare premiums, which were predicted to increase to the $106 range, will be $99.