The Social Security Administration has announced that there will be no social security COLA again this year. A COLA is a cost-of-living adjustment. This will be the second time in history that there has been no automatic adjustment. The first time there was no COLA was 2010.
According to the Richmond Times Dispatch:
The cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress in the 1970s. Based on inflation so far this year, the trustees who oversee Social Security project there will be no COLA for 2011.
The projection will be made official on Friday, when the Bureau of Labor Statistics releases inflation estimates for September.
The timing couldn’t be worse for Democrats as they approach an election in which they are in danger of losing their House majority, and possibly their Senate majority as well.
“If you’re the ruling party, this is not the sort of thing you want to have happening two weeks before an election,” said Andrew Biggs, a former deputy commissioner at the Social Security Administration and now a resident scholar at the American Enterprise Institute.
“It’s not the congressional Democrats’ fault, but that’s the way politics works,” Biggs said. “A lot of people will feel hostile about it.”
This past Friday, the same bureau delivered another painful blow to Democrats: The U.S. lost 95,000 jobs in September and unemployment remained stubbornly stuck at 9.6 percent.
Democrats have been working hard to make Social Security an election-year issue, running political ads and holding press conferences to accuse Republicans of plotting to privatize the national retirement program
I am not at all sure how this affects the Democrats. Supposedly those on social security will feel hostility and that they are not getting ahead. It would seem to me that the idea that there was low inflation might slip into those thoughts but I guess not. On another not, this kind of news usually affects other retirement plans such as pension COLAS.
Social security is the main source of income for 64% of retirees who got benefits in 2008. Many of them have not had a raise since Jan. 2009. There will be no raise until at least Jan. 2012 and even then, a raise is not certain. Social Security recipients got a one time payment of $250 last year. A third of SS recipients relied on social security for 90% of their income.
Has the cost of living gone up that much? Is the system used to calculate COLA faIr or even accurate? Is military retirement going up or is it stagnating like other pensions? Should retirees get something like a stipend check again this year?
It might be easy for some of us who don’t fit into that social security demographic to suggest that the seniors suck it up and tighten their belts. Many of them already had a mighty tight belt. Its easy to be a worker and on the resentment end of the SS argument. What some of us hear though is a resentment about pensions, a resentment about social security and cry to increase the working age to 75 and not a lot of compassion for those who lost their 40-50% in the crash.
Sitting back, I am wondering who the lucky ones are who aren’t resented? Warren Buffett? Rich people? There is a great deal of age discrimination in this country. Try finding a job at 70. Fat chance. Actually finding a job at 50 isn’t the easiest thing to do. Hell, finding a job is difficult. Otherwise we wouldn’t have a near 10% unemployment rate. Americans speak one thing and that’s all it is…speak.
Listening to the financial prognosticators, gold is getting ready to bubble up. (who really knows) The housing market is no place to put your money. The stock market might be going bull. Or…it might be going bear. Social security is going broke and you shouldn’t count or depend on it. Pensions are unreliable and are sucking the life blood out of states like NJ. In the case of the VRS, Virginia is sucking the life blood out of the pension, but still its the fault of the state workers.
The point here, is what is a person to do? If you put your life savings in a sock, then inflation eats it away to nothing. Maybe it would just be smart to call in one of Sarah Palin’s death panels. Those of you doing the criticizing might want to take a look at what the RIGHT thing to do to prepare for the future is. How do you guard against the game plan changing? How do you know what is right now will be right when you go to retire?
cato – a very slippery slope is what you are talking about.
How do you define a means test? What does it mean to have a high net worth? If we paid in equal dollars, why should I get more than you? Have we forgotten why we created the SS system in the first place?
SS is your disability (it may not be enough) or survivors benefits for your family – tooooo many people have no disability or life insurance as it is, and you want to take this away from them too. Yes, one who plans could have those plans in place, but for the majority of people, they do not either because they think they do not need it, or they feel they cannot afford it. Just look at how many people do not contribute to a 401K for their retirement savings.
@Pat.Herve
It’s a slippery slope indeed, and gets into all manner of moral hazard as you suggest. From my perspective, I believe that the debt level are rapidly approaching a point were they cannot be serviced by any means – neither by austerity nor by taxation. I’m simply saying that all options should be on the table for discussion, and that if I have a net worth of 10 million and you have a net worth of 500,000 upon retirement that I would possibly be paid .50 for every dollar I paid in while you would get full benefit.
The alternative, as I see it, is default in one form or another. Either by outright restructuring or by money printing, both of which would debase the currency and reduce the value of everyone’s nest egg accordingly. Everyone loses in this event. I suppose what I am saying is that I’d rather lose a little than lose a lot.
@Moon-howler
Welcome to the TEA party, Moon 😉
@cargosquid
Cargo, you saw that too in #46? I was shocked and had to take a drink because I didn’t believe what my eyes were telling me.
Still don’t. I’m going to take another nap.