Government

It’s official, no COLA for Social Security in 2011

The Trust Fund, under current law (blue) and u...

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For the second year in a row, there is no increase in Social Security benefits because of low inflation. The good news for working Americans is that no COLA also means no increase in the Social Security wage base for your payroll tax and for most Medicare beneficiaries no increase in their Medicare Part B premium.

While no increase in Social security benefits seems like a bad thing for those of us collecting benefits, the reality is that the COLA and how it is constructed is one of the main drivers of Social Security costs. Something has to change in the way Social Security is provided or our children and grandchildren will be taxed into mediocrity or will have minimal benefits when they are ready to retire.  It seems to me that one way to help lower costs is for there to be no COLA adjustment for anyone during the first five years of collecting a Social Security benefit.  Another option would be to convert every other COLA as generated under current law into a lump sum payment so that the compounding for each COLA is lower thus saving money, but also providing some assistance to those on Social Security.

What ideas do you have for better managing Social Security or do you like things just the way they are?

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Categories: Government, Retirement

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