Social Security

2017 Social Security COLA outlook prospects still depressing

  

Advertisements

16 replies »

  1. The not so funny thing is…prices of items in grocery stores might “appear” to be the same, yet a half gallon of ice cream has been cut down to 1.2 quarts. Sugar, same price, only 4 lbs!! Tuna, same price, amount in can decrease from 7 oz to 5 oz.
    Basically, all seems “status quo”, but, it’s NOT and THAT’S what is infuriating !!

    Like

  2. Maybe other states have utility companies that are not winning rate increases. Maybe some areas have grocery stores that have not increased prices or stocked smaller products with the same prices. My utilities — I’m talking heat, electricity and water, not cable/entertainment which I dropped long ago — have all increased. The stores where I shop are all more expensive than last year. When I have to hire someone to fix my HVAC, do complex plumbing, or heavy yard work, the price is always higher.

    My point is, the index needs to be made up of the basic living needs a retired or disabled person receiving SS requires to live. Medical costs would be there for most, of course.

    I don’t know how the current index can be rigged to show we aren’t paying significantly more than last year for all of these basic costs of living. Is there a link to an analysis of what is in the index and what is not?

    Like

    • It’s not rigged. It includes all the basic spending of life, but it does not look at individual states or locals. Those of us on Medicare are protected from health care costs generally much better than younger people. Utility charges which reflect the cost of oil and gas mostly are not rising. In fact, I have received several credits because of dropping natural gas prices. Of course, that doesn’t mean your bill isn’t going up because that reflects both rates and use.

      Like

      • You are absolutely right when it comes to your comment about Medicare and its hedge against inflation. Back in 1988, long, long ago, we got the Catastrophic Coverage Act of 1988. That was President Reagan, Tip O’Neil, and the AARP. There, they would cap out of pocket expenses for seniors. However, as soon as seniors found out that the beneficiaries of the new benefits/coverage would pay all the costs of the improvements, there was quite a storm and in one of the few times in my experience, (IRC 89 was the other), Congress repealed the law before it could be fully implemented. But, Congress heard seniors loud and clear. They put in lots of new, fancy, shiny price controls – in terms of balance billing limits, RBRVS, DRG, and pricing controls. And, you can see the result in how slowly Medicare copayments/deductibles have increased.

        In 1990, the Medicare Part A deductible was $592 and the Part B deductible was $75. Fast forward to 2012, and the amounts are $1,156 and $140 (I used 2012 to avoid the impact of the stupidity of the Patient Protection and Affordable Care Act of 2010). In case your calculator is not working, that is an average annual rate of inflation of 3.1% and 2.9%. That’s only slightly higher than the change in CPI during that same period. For comparison, the Medicare Part B premium, which is based on a different calculation, rose 5.9% during that same period, from $28.6 to $99.9.

        Bottom line, if you are a senior, covered by Medicare and perhaps eligible for Medicare Part C (a Medicare Advantage option), you may be paying less today for your coverage (premium and out of pocket, in real, inflation adjusted dollars using the CPI as the index), than you paid 25 years ago!

        Like

  3. β€˜2017 Social Security COLA outlook prospects still depressing’…. That depends on who you ask.

    If you are retired and living on your savings nest egg or a pension with no COLA, a static or falling CPI should be cause for celebration. It means that the buying power of your assets isn’t being diminished by price inflation.

    If on the other hand you have no assets and depend solely on social security for income you may feel cheated but you have to understand that the COLA is there just to keep your buying power at the same level as inflation rises. If you get a little more money to pay for things that cost more your situation remains the same.

    Of course there are those who will say that the government cooks up the CPI figures and that they don’t mirror reality, but that is a different issue,

    Like

  4. Only pay about 75% of the promised benefit – not 25%. And, it will be interesting to see how they apply the 25% “haircut” – with a cut, a delay or a combination of actions.

    In 1983, I can clearly remember Senator Howard Metzenbaum (D-OH), coming home to Ohio, and waiving a piece of paper over his head claiming that they have saved social security – once and for all. To fix Social Security “once and for all”, you need a dynamic process – something that benefits weenies like me have long proposed (as back when Clinton was president, and even back to the days of Jimmy Carter’s “MUPS” proposal and the 1983 Social Security Amendments Act). Dynamic here means that the pricetags change every year, and that people get to choose their poison on how to fund the shortfall.

    But, much like health reform, there are ten – twenty different ideas out there on reforming Social Security – everything from raising the taxes, removing the cap, reducing benefits, and capping the COLA. Perhaps Trump will propose some other concept, like his build a wall concept for immigration, and send the bill to the French or the Mexicans or Canadians, or fund it with Iraqi oil. But, people have their own preferences. They want the best Social Security benefits YOUR taxes will buy. And, the likely fall back position, “if I can’t get what I want”, is likely no decision – a continuation of the status quo. So, until and unless the Republicans or Democrats have full control of both houses and the presidency (as we saw with Dodd Frank, and the Patient Protection and Affordable Care Act of 2010, when Democrats had full control from January 20, 2009 to February 4, 2010 (until Scott Brown was sworn in as the 41st Republican)), don’t expect any solution.

    At least, don’t expect any solution until we get to the same/similar condition we were in back in 1983, where checks would be unilaterally reduced due to lack of funds.

    What happens if the trust fund runs dry? No one knows – but you end up with a conflict of two laws – The Social Security Act and the Antideficiency Act. The Social Security Act says we are entitled to the promised benefits. The key word here is “entitled” – this is not a contractual obligation. If we don’t get what we are promised, we could sue the government, because insolvency doesn’t resolve the government of the obligation it undertook. I suppose they could borrow money – they borrow money for every other purpose, don’t they? However, the Antideficiency Act limits the feds from paying more than authorized. The authorized limit is the balance of the trust fund.

    So, you end up with, what?:
    (1) Total benefits paid when the money is received – meaning it would be April, May, or June 2034 before we got our January 2034 check, or
    (2) Reduced benefits paid as money is received, with an IOU that should monies become available, we would get the rest.

    The trustees report says the trust funds would be “unable to pay scheduled benefits in full on a timely basis”. What does that mean, who knows?! More likely, since Congress retains the right to change the Social Security Act at any time – they could reduce benefits to current beneficiaries (unlikely) and future beneficiaries (more likely).

    Like

  5. They need to fix Social Security..once and for all….expand Social Security benefits..even with PT job..i had to take SS early..i still am barely making it…I thought the government was supposed to be for the people..not for themselves

    Like

    • The government is the people. The government has no money other than what it takes from the people. Around 2033 Social Security will only pay about 25% of the benefit you now receive.

      What should we do, fix that problem or raise benefits and where will the money come from to do either or both?

      Like

      • maybe they need to stop sending monies to other countries..Im sorry if I sound insensitive..but..our government needs to take care of its own people…before others…this country is in sad shape right now..and they need to make helping the people a priority…too much money is going to finance other countries that are going thru wars..and such….i think that too many countries are dependent on the United States…..the money needs to be used to fix the problems here in the US…first….again sorry if i sound insensitive and uncaring…

        Like

      • The fact is only 1% of the federal budget goes to international affairs including aid to other countries. The majority of all federal spending goes to Social Security and Medicare.

        Like

What's your opinion on this post? Readers would like your point of view.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s