The government announced yesterday that our Social Security benefit for next year will increase by 1.7 percent, reflecting the 1.7 rise in the Consumer Price Index through September of this year. The average benefit will go up by a little more than $20 a month, which will barely cover average increases in Medicare and allied medical insurance.
Inflation of 1.7%? Who are they trying to kid? Have you shopped in a grocery store
lately? Everything has gone up and the packages are getting smaller.
Meanwhile, have you checked on the increases in college tuition? Or seen how
healthcare prices have gone up? What about property taxes? Don't believe these fake government inflation reports. Inflation for seniors is closer to 10 percent if you look at the real world.
Does the general rate of inflation truly reflect the real lives of senior citizens? One reason the CPI is so low is because of the decrease in gasoline prices. By definition, retired people no longer commute, so we don't use as much gasoline, and don't benefit from the lower cost of fuel. But we do travel. We do heat our homes. Then, how do you factor in the cost of food and health care? The National Committee to Preserve Social Security and Medicare touts a different way to determine increases in Social Security. It recommends using a measure called CPI-E, rather than the CPI, arguing that the CPI-E more closely resembles the inflation measure for people over 62. On average, the CPI-E runs 0.2 percent higher than the general CPI. That would mean, instead of getting $20 more, you'd get about $22. A small amount. But it would add up over the years.
But where would we get the money? And are seniors getting greedy?
A lot of retirees don't understand that they didn't contribute nearly as much into Social Security as they are taking out, assuming they live a normal life span. Social Security was never meant to be your sole source of support, but it was supposed to help those who didn't have a pension or could never save enough to get by. But today's recipients are receiving more than they put in, while younger generations are getting screwed. Remember, people who are currently working and paying into Social Security are not
getting much in the way of raises either. To a lot of people a 1.7 percent increase doesn't seem bad. Many workers have not had any raise at all for two or three years.
It's true that Social Security was designed as a supplemental program -- not to replace all your income, but to put a floor on your income. And it has worked. According to the U. S. Census Bureau, the poverty rate for people over age 65 clocks in at 9.5 percent, compared to 14.5 percent among the population as a whole, never mind the poverty rate for single mothers or inner city minorities. The poverty rate for children is 19.9 percent. Do we really want to take money away from poor children in order to send more to middle-class seniors? Do we want to increase the payroll tax on our kids, who don't even believe they'll get the same benefits that we do out of Social Security?
A statement like, "I can't get by on Social Security" is ridiculous because the program was never meant to be the primary source of income during your
retirement years. It's a safety net, no more than that. That's why you save for retirement starting early in our
career using 401Ks and IRAs. Look, the choices are clear: Save systematically,
lead a frugal life, always spend less than you make, and this will allow you to maintain your lifestyle in your sunset years. If you're depending on Social Security alone, then plan to downsize your
lifestyle drastically. The choice is yours.
But then the government hits us when we're down. Because inflation is so low, and the government is still trying to pump up the economy five years after the recession ended, interest rates are close to zero. Those of us who scrimped and saved and built up a reasonable nest egg to supplement Social Security (like they told us to), get nothing from our investments -- not if we try to keep them safe by putting them in the bank (at less than 1 percent interest) or keep them in "safe" government or corporate bonds (at 2 percent interest). Yes, we can invest in the stock market. But that puts our nest eggs at risk. If the market tanks like it did in 2008 or 2001, then we'll be the ones who have to downsize our lifestyles drastically.
Everyone knows that it's not low inflation (which is anything
but low) but negative real interest rates that steal from savers to
support the stock portfolios of the 1 percent. If not for the government bailouts and the artificially low rates, would the price of gas, food,
medicine, tuition, and stocks go up? No, everything would be much
more affordable. Who would benefit? Everyone who is a consumer and not an investor -- including most seniors. Who would
lose? The 1 percent. But so what? They lose a little, but would still be left with their millions.
So where do we stand? Well, we have Social Security (even though it could be more); we have our IRAs (which are doing pretty well, at least for now); and most of us (80 percent) own a house that's worth less than it was a few years ago, but is still a pretty decent asset ... and also keeps us warm and dry all night long.
Here's the way I see it. Lots of anxieties. Lots to complain about. But overall, we've got it pretty good, don't you think?