It seems that the Social Security Cost of Living Adjustment will elude senior citizens for the first time in 3 decades. Stagnant prices which are the basis for the COLA associated with Social Security will prevent the increase.
President Obama has suggested a one time payment of $250 to offset the annual raise which usually comes in January each year. In a good year the cola is about 5%. Disabled Americans would be eligible for the same $250. The cost of this one time payout is estimated to be at least $13 billion dollars.
The Washington Post reports:
An increase in benefit checks each January has been a yearly ritual since the mid-1970s, when the government moved to ensure that its subsidies to retirees, pension recipients and others who receive Social Security benefits kept pace with inflation. Thursday’s announcement by the Labor Department will mark the first time that the federal formula used since then, which is tied to the consumer price index, will translate into no increase at all. That is because consumer prices have remained stagnant in the weak economy — a sharp reversal from this past year, when Social Security checks grew by 5.8 percent, an unusually large amount.
Congress and President Obama seem to be scrambling to make this all happen and to at least make it look like they haven’t forgotten the seniors. To me, it seems $250 is like pissing in the ocean.
Will Congress get a raise this year? What is their raise based on? Performance? (Bwwaaahahahahahaha) Is there some formula that determines what their raise will be? How about benefits? Do you suppose they pay as much for their health care as say a senior citizen living on social security does? Just Medicare Plan B costs about $100 a month now. They just snip that right out of the social security check as a courtesy, to save the seniors from buying stamps. Then there are the bridge policies and the rx policies. People I have talked to pay at least $300 a month. That’s getting pretty steep. I am willing to bet Congressmen and Senators don’t pay this much. I wonder how one would find out?
If people thought there were pissed off seniors before, they ain’t seen nothing yet.
What you need to bear in mind here is that Social Security, as an entitlement, is NOT subject to annual budgets passed by Congress and signed by the President. The COLA is automatically added annually based on the Consumer Price Index, or CPI. Neither Congress nor the President has a say on either the amount of the increase, or, in fact, whether or not there even is one.
My question is, does the CPI include medical costs or prescription drugs? I don’t know.
Having said that, there really is no substantive reason to increase social security benefits if CPI has remained flat.
Also, I wonder if federal employees will be receiving an increase this January.
First time in 3 decades……now THAT’S what I call “change you can believe in!” Seniors are just going to have to learn to obey Maximum Leader. If seniors complain, they are all racist.
Hey Slowpoke, one of your own Republican Senators says there should be no raise:
“I think it would be inappropriate,” said Sen. Judd Gregg, R-N.H. “The reason we set up this process was to have the Social Security reimbursement reflect the cost of living.”
http://news.yahoo.com/s/ap/20091015/ap_on_bi_ge/us_social_security_cola;_ylt=AiZmWz5_X1cKbeNcJVBXIHms0NUE;_ylu=X3oDMTNuaHFjOWN1BGFzc2V0A2FwLzIwMDkxMDE1L3VzX3NvY2lhbF9zZWN1cml0eV9jb2xhBGNjb2RlA21vc3Rwb3B1bGFyBGNwb3MDMgRwb3MDOARwdANob21lX2Nva2UEc2VjA3luX3RvcF9zdG9yeQRzbGsDc29jaWFsc2VjdXJp
I have to agree. It may be bad politics, but there should be no raise in Social Security if there is no corresponding increase in prices.
Here’s a link to the Bureau of Labor Statistics describing what’s in the CPI and how it’s calculated:
http://www.bls.gov/cpi/cpifaq.htm#Question_7
@Starryflights
The federal retirees will not be getting an increase either.
There are MANY folks out there working every day that do not get a COLA. I’ve never understood how those that don’t work get an increase every year while those working may go many years without this type of increase. Too many people abuse the disability benefits, and yet they get an increase while those working just keep on plugging away at the same rate. I’m sure I’ll get beat up for being so “cold and heartless”. Oh well, it’s how I feel.
It’s a math problem. Seniors, military & Government active duty & retirees and probably a few other categories have benefitted from the math (the COLA tie) for years. We (since I am one of those impacted) shouldn’t complain when the math doesn’t result in an increase. Look around… our economy is in a shambles… prices have stagnated… people are out of work… get over it and move on.
Creating a problem that doesn’t exist and then fixing it with giving away with more of our money is (IMHO) irresponsible. Those $250 payments will only add to the deficits. I don’t believe throwing our money (I emphasize our money… money that should have been left in our pockets to spend as we wish thus contributing to the growth of small businesses, creating jobs, etc) answers any problem.
Opinion, my mother is federal retiree, and she’s not complaining either. It’s nice when the increases happen, but the economy simply does not warrant that at this current time.
The $250 payment is joke. I don’t think that one time deal should be given either. You are right it is OUR money and the feds need to quit throwing it away.
The Social Security cost of living adjustment is messed up!
http://robvstate.com/2009/10/10/social-security-cola/
If we had money to give big banks enough to pay employees huge million dollar bonus’s we sure as hell should be able to keep food on the tables of seniors who depend on social security to survive.
I do not believe federal retirees are impacted by the social security situation. Not sure what all is tied to CPI. What is the cut off date for CPI calculation?
Blaming Obama is misdirected. He didn’t make the consumer price index stagnate. Last year at election time we knew we were in a recession. So that is just a ridiculous political statement.
I am not sure what $250 is going to do for anyone. I hardly think that seniors are people who are sitting on their asses while the rest of the world works. There are people who heavily rely on SS retirement to make ends meet. Medicare and its requirements take a big chunk of SS money–more than people realize. The average SS check is around $1,1000.
Opinion, regarding the other groups you listed, are all of those groups using the same formula that SS is using? If yes, then all of those receiving benefits from that group will get no increase?
Of course they’re cutting COLA. How else can they fund all the “Obama Money” being spread around to try to protect their power? The Fed is out of control, and has been for years. I don’t care which party had the power, the momentum has been building since the New Deal. I tell you who I would vote for: Any candidate whose platform is cutting the size and scope of Federal government back to ’80’s size….1880’s that is!
Moon, the federal retirees get the same increases that those on social security do. This has not always been true, but has been this way for a number of years. The federal retiree I know says she’s not going to complain about no increase this upcoming year, and she said forget that $250 check too. The increases the past two years have been decent.[redacted]
I understand people need their money to make ends meet, but remember these same indivuals do NOT have the cost of working(gas, higher auto insurance premiums, dry cleaning, etc) Sorry, I’m liberal on social issues, and conservative on fiscal matters.
I am surprised there has not been a hue and cry over federal employees being cut also. The Federal govt is the largest US employers so there ought to be a lot of pissed off former fed employees if this is the case.
The news has not mentioned that they are in the same pot of stew. Will they also get $250.
I think Wake Up and Lafayette ansered the question. All raises are referred to as COLA raises; however, it is my understanding that Social Security is more tightly locked into the CPI while there is more discretion in Civil Service and Military raises. I don’t claim to be an expert (although I have been in two of the aforementioned groups and will eventually be in a third).
Know those nasty seniors will spend the $250 on luxury items like
basic food and medical needs or not freezing to death, but hey,
they will almost certainly quickly circulate it back into the economy
where it will benefit all of us, right?
From http://www.fedsmith.com/article/1742/2009-cola-jumping-58-some-federal-retirees.html
M.H, that article was written Thursday, October 16, 2008. I wish…
Try this Federal Times article…Obama reasserts calls for 2% federal pay raise they are generally a better source of information.
http://www.federaltimes.com/index.php?S=4259733
I didn’t know this… from http://usmilitary.about.com/od/militarypay/a/2010paychanges.htm
Military Retirement. Bad news for military retirees. It doesn’t look as if there will be a COLA (Cost of Living Adjustment) raise for 2010. Why? Because, by law, the COLA for military retirees and social security recipients are tied to the Consumer Price Index (CPI), which measures the cost of goods (rate of inflation). While the CPI rates for military retiree COLA is calculated from the third quarter (July, Aug, Sep) rates, and they haven’t been released yet, the CPI for the year, so far, as showed a steady rate of deflation, not inflation. In other words, prices have been going down (on average) through the year (according to the CPI), which means that the CPI for the third quarter of 2009 is expected to be less than the 3rd quarter of 2008, meaning no raise for military retirees and social security recipients.
Well, hell, I don’t know what year it is. Can anyone find it for the upcoming year? I always get in trouble when I cross years.
You all interpret this. I think I got the right year this time.
Not sure about when it kicks in etc.
http://www.nalc.org/depart/retire/whatsnew.html
M.H., that last reference is dated October 15, 1909…
…made you look?
Awe come on, I see 2009. Yes, I fell for it.
So who gets it and who does not? And if not, why aren’t they howling?
I hear a wicked rumor that more is being taken out for medicare.
Poor Richard makes an important point: many seniors count on the money and the pittance increase for food, medicine, shelter and heating. Something like 40% of all seniors rely only on SS.
Here is more information on determining fed cola.
http://www.narfe.org/departments/home/articles.cfm?ID=942
COLA is stagnant while Medicare cost increase. Anyone think there is a problem with that skewed formula?
I also hear the rx policies are getting more expensive and so is the gap policy. What have you heard from your MIL Elena?
I should not have turned up my nose on that $250. To many people, every penny counts. Something is better than nothing and good for Obama and Congress for trying to get it for those on medicare and who are disabled. I doubt if very many people will send it back if it arrives.
Many seniors have been also hurt by their 401k plans being reduced by half or more. Sort of the double whammy. Others have had to defer their retirement because of anemic portfolios.
While I am against the Government spending our money on something so frivilous to begin with, I would at least hope that they consider some means test before handing out $250 checks (of our money – can’t say that enough). Sorry, some folks just don’t need it. It will probably take $500-$1000 in revenue to support each $250 check by the time Government takes it’s “handling charges” out of the revenue stream. Let us keep the money… we can do more with it… and more will be in circulation to do things with. While we are talking about seniors, it’s the grandchildren (and great-grandchildren) who will inherit this debt that I truly worry about.
I remain disappointed that our society has evolved to a point where Government is the answer to everything. No COLA adjustment because prices are going down? No problem, print millions of $250 checks! We really have to stop thinking that way.
Well, hopefully to clear things up about Federal retiress a little. Retirees are subject to the CPI also. Active Federal employees’s system is different. For them, the increase is based upon an evaluation what a similar job in the private sector gets (hypothetically). They have never gotten the “catch up” raises to get them on a par with private sector. Not interested in debating whether that is right or wrong as I never complained about the increases I got.
Federal retirees knew weeks ago that there would be no increase. What gripes me is that if a retiree works in private sector, the retiree has to pay social security taxes but generally has a greatly reduced social security when it is time. That was done during the Reagan administration to make sure that the social security trust would get more money.
The fallacy that most people have is that the Federal employee under the older system got a “free retirement”. That was very untrue as Federal workers paid more into the Federal system than counterparts in industry. there was no cap of taxes on the income like social security and it was a higher percentage. So Federal retirees got good package but they paid for it too.
Ah yes, tell the govt to butt out of our business. Hmmmmm, it worked out great the way we ignored wall street, insurance reform, etc.
I believe in the social contract by John Locke.
@A PW County Resident
There are many federal retirees that spent their entire career’s working for the government that will never collect one red cent from SS. My mother is one of those. She worked a full career for the government and wasn’t going to start a second career in the private sector for the “pennies” should would get from SS. She paid into the federal retirement system and they most certainly paid their fair share for the retirement they collect. Absolutely no such think as “free retirement”!
Yes, I agree Lafayette. What gripes me is that I am working in a second career and I am paying into social security without the hope of getting what others who pay less will get. it is taxation without benefit.
It would be like paying taxes like everyone else and when you call for fire or police they say, “well you have to pay again even if you pay the same or more than others because you live in that neighborhood.”
I am trying to understand everyone’s retirement here. Trying to understand the grouse here. I understand Lafayette’s mother’s grouse from an offline discussion. Trying to understand resident’s grouse–Remember those of use who have never been fed employees don’t understand all the ins and outs.
All I know is fed and VA state retirement systems are far better than social security.
I can’t discuss this at home because my husband thinks that welfare programs come out of social security and nothing I say will convince him it doesn’t.
Please explain. This is the part I don’t understand. Is it duration?
Elena, I’m familiar with John Locke’s Two Treatises of Civil Government (which I assume you are indirectly referencing). Locke was mainly concerned with social order and protection of property. How do you see it applying here?
To me, the social contract was an agreement between the Governing body and the people. Social order and protection of property can be viewed from a comprehensive and broad perspective.
I have an agreement with my government that I give up certain rights as long as they protect my interests to survive. If I cannot afford health care, if the profiteering of insurance companies prohibit my ability to pay for medical care, I agree to let the government take certain monies from me in order to provide some of those essentials. Ergo, the “social contract” of medicare and social security.
Elena, Locke’s focus was a civil society. His main concern was the protection of property and some process for handling property disputes. I think its a stretch using it as a reference for health care.
Please explain. This is the part I don’t understand. Is it duration?
Well, first I am not grousing much. But say you have worked for years and paid social security and you put in $50,000 and had your 40 quarters. At a certain age (it changes), you get social security.
Well a Federal employee after retirement, also puts in $50,000 and earns the same 40 quarters. At the same age, you would expect both to get the same amount. But under the law, the Federal retiree’s benefits are reduced by an amount of his Federal retirement even though it is a different system. So the Federal retiree has put money into both systems but does not get the full benefit of the second system even though the contributions were the same between the Federal retiree and the other person.
So…
It even works out that the first person puts in less money and still gets more retirement from social security than the Federal retiree.
A PW County Resident, I have to ask… why would anyone take a job with a retirement package they don’t like? I admit you prefaced your comment with, “I’m not grousing much” so I’m guessing the fact that the fed is one of the few employers with a traditional retirement plan that is considered generous off-sets your angst.
I disagree Opinion. I don’t read it as just about property rights, i.e. material tangible objects. A civil society does not have people dying when death could be easily preventable with adaquete and accessable health care. Obviously back then, in the 1600’s there was no such thing as insurance.
“no one ought to harm another in their life, liberty, health, or property”
I would argue, as Locke states, that life and health are absolutely a part of that government function of the social contract.
Opinon, very few of us have the option of taking the perfect job. Retirement packages over the years have gotten real ho hum.
Thanks PWR, for the explanation. Those of us who have been in the SS system since dirt formed on the earth just don’t think about those things.
I know what I want to ask but can’t find the words. Let me try but I am apololgizing in advance for fumbling….if Tom has been in the social security system since age 16 and is now 66 and is retiring, he has longevity of 50 years which many more than he needs. Now lets say Larry retires from the feds after 30 years so he is now 55. He works another 11 years for a company in the private sector.
He isn’t going to be putting in nearly as much as Tom has put in.
Are you telling me that Larry will lose some of his fed money because he has SS money coming in also for working in the private sector? That totally isn’t fair. He should get what anyone else would get who worked for 11 years in the private sector.
I also do not see why retired federal employees who are widowed don’t get their husband’s survivor benefits if he was employed by private sector. Totally not fair.
On the other hand, old federal pensions are far better than state pensions and state pensions are far better than social security. There is just no comparison. The difference is a state pension does not knock you out of any social security. But…you know that going in to all of the jobs.
I also heard for years how fed is never equal to private sector and that private sector always made more money. Not true. That is an old wives tale. The govt also offers much more job security. In private industry you can be salesman of the month and come in on Monday and get told to clear out your desk by 5 pm.
I feel very dense about this. My reaction has been why should there be a Cost of Living increase if the measurement of the cost of living hasn’t increased? And why is the President (and others) advocating a payment of billions of dollars in this situation? If the answer is that the way we measure these things is not accurate, then change the way we measure on a going forward basis. But to hear people equate this kind of indexing to a “raise” seems off-point.
I have mixed emotions until I look at who this situation is affecting. There are so many people living on just social security. We can talk it to death about how they should have done this and how they should have done that…but woulda coulda shoulda. Not everyone had every option open.
Part of the problem is that there is no means test. NoVA Scout, good to see you. You make a good point about how we measure these things. It sounds like we need to take a closer look about how we ‘increase’ the senior salary.
Medicare B premium is supposed to increase. However, there are stipulations that it can’t increase more than the cola. It is all very confusing to me. I think it is supposed to be confusing. If you can’t figure it out you can’t ask questions. 😉
interesting point. but what about energy costs rising over the winter, will that be a cost of living increase? @NoVA Scout
I think we should let the, and I hate to bring this up, illegal aliens coach the retirees. Face it, anyone who can support a family by picking up odd jobs occasionally at below minimum wages must surely know how to survive on a meager income. It’s a crime when those who have supported the country with taxes their entire lives are now sometimes worse off than those who show up uninvited!
SA,
Why do you have to be such a ninny sometimes? Totally irrelevant point from my opinion.