I’m guessing if we ask seniors, the answer will be 100% yes. After all, inflation eroding fixed income is real and annual COLAs have been promised and are expected.
Social Security benefits have lost 34 percent of buying power since 2000, according to the 2018 Social Security Loss of Buying Power Study released this week by The Senior Citizens League, a nonpartisan senior citizen’s action group. Source: https://www.myfederalretirement.com/public/2108.cfm
If we ask today’s working Americans who are paying for those adjustments, the answer may not be so unanimous.
A promise is a promise, so let’s take current beneficiaries and those nearing retirement off the table.
But Social Security is not supposed to be the sole source of retirement income, and realistically not even the majority.
The federal government loses or defers considerable revenue because of various retirement schemes from pensions, 401k plans and IRAs to small business programs. These plans are designed to provide retirement income. For most average Americans if they provide 40% of more income replacement in addition to Social Security, they should be in good shape during retirement.
So, is it too much to ask Americans to plan a retirement income to keep up with inflation as it applies to their spending? At a minimum why should anyone who begins retirement with the maximum Social Security benefit not be able to offset inflation with their own funds?
A person earning $128,000 today and retiring in September 2018 at age 67 receives about $31,164 in annual Social Security benefits and with a spouse $46,746. Such a person should have been able to invest sufficiently to at least offset inflation during retirement … in my opinion.