On Friday morning the government will release the 2011 cost-of-living adjustment, or COLA, in conjunction with the Consumer Price Index for September.Property taxes are not being frozen. Energy costs aren't frozen, but those on Social Security are going to find it even more difficult to cover their costs because their checks aren't increasing.
Usually the COLA is based on changes in the CPI from the third quarter of one year to the third quarter of the next, and that would mean an increase of about 1.5 percent – $20 to $25 a month for the average recipient.
But because there was no increase in 2010 as the result of a drop in the CPI after a big run-up in 2008, federal law requires that the 2011 COLA be based on the third quarter of 2008.
And that means no increase — and even tighter budgets — for a cross-section of retirees I spoke with last week at senior centers across North Jersey, including Stephen and Ginny Liszewski, an East Rutherford couple who rely on monthly Social Security checks for themselves and for treats for their 17 grandchildren and two great-grandchildren.
"The bulk of our income comes from the checks," Liszewski, 85, said after a morning of dancing at the Saddle Brook senior citizen center. A benefits freeze "puts a dent in our ability to function. We buy a little less, don't eat out as much, don't travel as much."
Social Security benefits are based on up to 35 years of a worker's earnings. For some, that can mean as much as $2,346 a month (assuming they start collecting at full retirement age).
But the average retiree gets just $1,153 ($1,876 for couples), so a 1.5 percent increase would mean an extra $17 ($28 for couples).
That won't be coming, but there is a bright spot for most Social Security recipients.
Thanks to a "hold harmless" clause in federal law, increases in Medicare rates are prohibited if an increase would reduce the net Social Security check. As a result, about 93 percent of recipients will also see rates frozen for Part B, which covers doctors' services, outpatient care and home health services, at $96.40 a month for the second consecutive year.
That will save most Medicare B participants about $14 a month.
However, those who enrolled in Medicare B this year will pay $110.50. And that could go higher when 2011 rates are announced next month.
Showing posts with label Social Security. Show all posts
Showing posts with label Social Security. Show all posts
Sunday, October 10, 2010
Fixed Income Fix
If you're a senior citizen on a Social Security fixed income, you're about to get a whole load of bad news this week when the federal government is set to announce that you will not get a cost of living increase for the third straight year.
Thursday, March 25, 2010
Social Security Marches Towards Insolvency
Well, this should give plenty of people cause for sleepless nights. That rosy expectation that Social Security wouldn't run into the red until 2017 as estimated back in 2008 under then CBO chief Peter Orszag was just that - way too rosy.
It now looks like Social Security will begin running into the red this year, and except for a 2 year blip in 2013 and 2014, will begin running deeper and deeper into the red each year thereafter.
As I've previously pointed out, the best way to deal with this mess is to index the benefits to age groups. It wouldn't necessarily require a reduction in benefits expected, although depending on just how dire the financial situation is with the fund, that too may be necessary. The problem is that politicians on both sides of the aisle are predisposed to doing nothing about the fund since any changes are likely to bring about a firestorm of controversy.
I think there should be a bigger firestorm of controversy over the fact that no one is doing anything to bring fiscal sanity to the Social Security system and that it is all too likely to be insolvent before long. Moreover, the changes I propose wouldn't actually harm anyone on the cusp of taking benefits now, and that people would be able to build the changes in to their own financial planning well in advance.
It now looks like Social Security will begin running into the red this year, and except for a 2 year blip in 2013 and 2014, will begin running deeper and deeper into the red each year thereafter.
This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.While the Times says that the SS fund wont go insolvent until 2037 or so, that ignores that the SS fund is itself loaded for bear with nothing but Treasury IOUs. We've been borrowing against the fund for so long that no one wants to accept that the program is in such deep trouble that changes to the program aren't just inevitable but are necessary far sooner than anyone wants to admit.
Stephen C. Goss, chief actuary of the Social Security Administration, said that while the Congressional projection would probably be borne out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual.
The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.
Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances.
“When the level of the trust fund gets to zero, you have to cut benefits,” Alan Greenspan, architect of the plan to rescue the Social Security program the last time it got into trouble, in the early 1980s, said on Wednesday.
As I've previously pointed out, the best way to deal with this mess is to index the benefits to age groups. It wouldn't necessarily require a reduction in benefits expected, although depending on just how dire the financial situation is with the fund, that too may be necessary. The problem is that politicians on both sides of the aisle are predisposed to doing nothing about the fund since any changes are likely to bring about a firestorm of controversy.
I think there should be a bigger firestorm of controversy over the fact that no one is doing anything to bring fiscal sanity to the Social Security system and that it is all too likely to be insolvent before long. Moreover, the changes I propose wouldn't actually harm anyone on the cusp of taking benefits now, and that people would be able to build the changes in to their own financial planning well in advance.
Tuesday, July 21, 2009
A Modest Proposal To Reform Social Security
Okay. Since we all know that entitlements like Social Security are going to go bankrupt and we need to do something, here's a modest proposal I'm putting forth that will cost nothing, and will make sure that the program can continue to provide benefits.
It would not affect the current level of benefits for those who were born through 1965, which allows for full benefits for age 67, and partial benefits at 62. For those born in 1965-1979, increase the year that you can receive full benefits by one year (68/63). For every five years after, increase the year in which you can receive full benefits by one year.
From 1970-1975, 69/64;
From 1976-1980, 70/65;
From 1981-1985, 71/66;
From 1986-1990, 72/67;
From 1991-1995, 73/68;
From 1996-2000, 74/69; and
From 2001-2005, 75/70.
In other words, someone born in 1972 would have to 69 (or 64 to receive partial benefits). This adjustment would take into account the higher standards of living, the life expectancy, and maintain the solvency.
You could do variations on this - make the time frame 7 years or so, but every five years seems like a reasonable and easily calculable grouping.
It's so simple, and yet it's precisely why it wont get done.
This proposal means that those Baby Boomers who are first entering retirement age will not have to suddenly adjust to new more stringent requirements or face retirement without Social Security benefits as they had been preparing to do for years. Those born after 1965, since they have more time to prepare for retirement will have that much more time to build up their own retirement resources outside Social Security (401(k), 403(b), savings, etc.)
This would alleviate the need to reduce benefits, although depending on just how far out of balance the system is, benefits would have to be reduced to maintain solvency and bring the program back into the black.
It would not affect the current level of benefits for those who were born through 1965, which allows for full benefits for age 67, and partial benefits at 62. For those born in 1965-1979, increase the year that you can receive full benefits by one year (68/63). For every five years after, increase the year in which you can receive full benefits by one year.
From 1970-1975, 69/64;
From 1976-1980, 70/65;
From 1981-1985, 71/66;
From 1986-1990, 72/67;
From 1991-1995, 73/68;
From 1996-2000, 74/69; and
From 2001-2005, 75/70.
In other words, someone born in 1972 would have to 69 (or 64 to receive partial benefits). This adjustment would take into account the higher standards of living, the life expectancy, and maintain the solvency.
You could do variations on this - make the time frame 7 years or so, but every five years seems like a reasonable and easily calculable grouping.
It's so simple, and yet it's precisely why it wont get done.
This proposal means that those Baby Boomers who are first entering retirement age will not have to suddenly adjust to new more stringent requirements or face retirement without Social Security benefits as they had been preparing to do for years. Those born after 1965, since they have more time to prepare for retirement will have that much more time to build up their own retirement resources outside Social Security (401(k), 403(b), savings, etc.)
This would alleviate the need to reduce benefits, although depending on just how far out of balance the system is, benefits would have to be reduced to maintain solvency and bring the program back into the black.
Wednesday, April 15, 2009
Who Is Cheering For Big Government?
USA Today has a misleading headline story claiming that people are cheering the return of big government (for now).
The breakdown of whether government has taken too much power is close - 46% the Administration has the right amount of power, while 40% think they got too much. I'd say that as more people realize the extent to which the Administration has grabbed power at the expenses of citizens, the states, and businesses, those numbers will turn around.
Strangely, the percentage of people who think that government is doing too much is 50% compares with 42% who think that government should be doing more.
Taken together, it suggests that the Administration is heading for a backlash.
Has anyone actually polled to find out whether we won that War on Poverty? Big government programs have been mostly a disaster, destroying inner cities with such ideas as urban renewal (destroying tenements and building densely packed housing projects that destroyed the social fabric of communities and allowed the rise of crime and decay through urban areas across the country). Other big government projects resulted in massive spending with no care for the consequences of paying for the programs down the road - think Social Security, Medicare, and Medicaid.
Also ignored by USA Today is the rise of the Tea Party protests, which started as a grassroots protest against out of control government spending. The protests have spread across the country and show that there is widespread dissatisfaction with the exorbitant spending beyond our national means. Throwing hundreds of billions at failed companies and then hundreds of billions more at pork barrel programs that may not even get started for several years as a stimulus to the economy now is an insult to our collective intelligence.
The economy has been showing signs of recovery even before the porkfest projects get underway. The government, had it chosen to not spend one penny on new programs in the porkfest, would have saved more than $1 trillion. Instead, we'll be paying off that massive spending for generations to come. Our grandkids will be paying for this costly choice.
It's not simply anti-spending that is fueling the Tea Party protests, but the out-of-control spending that threatens to undermine confidence in the US government and the financial markets. The Obama Administration is not letting the crisis pass without taking full advantage of the situation by pushing through an agenda that massively expands government programs and projects. It's the priorities of the Administration that are at issue as well; the Administration doesn't seem to find the money to pay for improving and expanding the US military at a time when the kinds of threats to the nation are growing.
UPDATE:
For those interested in attending NJ Tea Parties, the Record has a list of locations, including the Bergen County Courthouse in Hackensack and the offices of US Senator Bob Menendez and Sen. Frank Lautenberg in Newark.
UPDATE:
Twitter has running updates of various Tea Parties going on around the country, including photos and blog posts. (HT: Instapundit)
Most Americans say they're glad Big Government is back to help through hard times. But they aren't sure they want it to stay.Where to begin with this mess? How about with the polling figures that show that most Americans think that Congress and the Administration have spent too much money on the stimulus package (aka porkfest). 55% think that they spent too much. I'd say that's a repudiation of the idea of big government right there. It also is why the Tea Party protests have picked up steam around the country.
The Obama administration, trying to reverse the economy's meltdown and prevent it from happening again, is redefining the role of the federal government in the economy — spending trillions of dollars, building new regulatory systems for financial institutions and effectively taking over a major part of the automobile industry.
Although an expansive federal government hasn't had a defender in the White House for nearly a half-century — since Lyndon Johnson and his Great Society program — most Americans in a nationwide USA TODAY/Gallup Poll approve of President Obama and the government's latest assertiveness. However, some of the steps he has ordered have made them wary.
By 3-to-1, those surveyed say government's expansion should be cut back when the economic crisis is over.
"They should do whatever is necessary, especially for the automobile business," says Lee Heffner, 78, of Temple, Pa., who was among those polled. For 50 years, he ran the Ford dealership his father founded during the Great Depression of the 1930s. Even so, he worries, "it seems we're on the trend of nationalization for a lot of things. Once the government gets into something, it's very seldom they back out of it."
Obama on Tuesday defended his economic proposals and the results they've gotten so far, calling it "a new foundation" for sustainable economic growth through this century. "We have been called to govern in extraordinary times," he said in the speech at Georgetown University, cautioning that 2009 "will continue to be a difficult year."
The White House, experimenting with Washington's role in the economy, is taking unprecedented steps: helping some homeowners who can't handle their mortgage payments, underwriting the warranties for GM and Chrysler cars and organizing a huge public-private rescue plan to buy up banks' most troubled assets. The Treasury Department on Friday pegged the budget deficit for this year at $1.75 trillion, nearly quadruple last year's record shortfall.
The moves have raised questions about how far government should go in directing the market — and whether, in some sectors, it could wind up deciding which businesses survive and which ones fail. An opening sketch this month on NBC's Saturday Night Live showed a faux Obama delivering edicts on the survival of everything from fast-food chains to makers of jeans. ("Levi's, yes," the Obama impersonator deadpanned. "Wrangler, no.")
The breakdown of whether government has taken too much power is close - 46% the Administration has the right amount of power, while 40% think they got too much. I'd say that as more people realize the extent to which the Administration has grabbed power at the expenses of citizens, the states, and businesses, those numbers will turn around.
Strangely, the percentage of people who think that government is doing too much is 50% compares with 42% who think that government should be doing more.
Taken together, it suggests that the Administration is heading for a backlash.
Has anyone actually polled to find out whether we won that War on Poverty? Big government programs have been mostly a disaster, destroying inner cities with such ideas as urban renewal (destroying tenements and building densely packed housing projects that destroyed the social fabric of communities and allowed the rise of crime and decay through urban areas across the country). Other big government projects resulted in massive spending with no care for the consequences of paying for the programs down the road - think Social Security, Medicare, and Medicaid.
Also ignored by USA Today is the rise of the Tea Party protests, which started as a grassroots protest against out of control government spending. The protests have spread across the country and show that there is widespread dissatisfaction with the exorbitant spending beyond our national means. Throwing hundreds of billions at failed companies and then hundreds of billions more at pork barrel programs that may not even get started for several years as a stimulus to the economy now is an insult to our collective intelligence.
The economy has been showing signs of recovery even before the porkfest projects get underway. The government, had it chosen to not spend one penny on new programs in the porkfest, would have saved more than $1 trillion. Instead, we'll be paying off that massive spending for generations to come. Our grandkids will be paying for this costly choice.
It's not simply anti-spending that is fueling the Tea Party protests, but the out-of-control spending that threatens to undermine confidence in the US government and the financial markets. The Obama Administration is not letting the crisis pass without taking full advantage of the situation by pushing through an agenda that massively expands government programs and projects. It's the priorities of the Administration that are at issue as well; the Administration doesn't seem to find the money to pay for improving and expanding the US military at a time when the kinds of threats to the nation are growing.
UPDATE:
For those interested in attending NJ Tea Parties, the Record has a list of locations, including the Bergen County Courthouse in Hackensack and the offices of US Senator Bob Menendez and Sen. Frank Lautenberg in Newark.
UPDATE:
Twitter has running updates of various Tea Parties going on around the country, including photos and blog posts. (HT: Instapundit)
Monday, November 12, 2007
More Profiles In Cowardice
Sen. Barack Obama (D-IL) has come forward over the weekend suggesting that taxes that fund Social Security be raised if he becomes President.
He's currently a Senator of the United States. If he believes that the problem is so serious that taxes should be raised, how about introducing legislation to that effect and getting the debate going on it right now?
Well, once again, Presidential campaign politics gets in the way of real action. If he were to actually propose such a tax increase and introduce such legislation, it would tie him to that position, and it would be unacceptable on the campaign trail since he would be forever linked to a proposal for a massive tax hike (whether it is justified or not isn't going to get discussed much).
The fact is that Obama is right that Social Security funding is a mess, but if he were truly serious about fixing it, he shouldn't want or have to wait until he's elected President to act. He's in a position to start things right now - as a Senator.
Considering that he's got an empty record as Senator, it would be quite the feather in his cap were he to get something done on Social Security. However, do not expect that to happen anytime soon.
It is the same with the other Congressional candidates. They all talk about what they will do, but when you look at their record, you seen nothing but a blank slate. Candidates do not want to do anything that might tie them to a position that might affect their chances in the primaries or the general election, so they miss votes that might have consequences going forward, or they make proposals for what they'll do as President when they have more than adequate opportunity to act while in Congress.
Profiles in cowardice. (HT: Gaius at Blue Crab Boulevard)
He's currently a Senator of the United States. If he believes that the problem is so serious that taxes should be raised, how about introducing legislation to that effect and getting the debate going on it right now?
Well, once again, Presidential campaign politics gets in the way of real action. If he were to actually propose such a tax increase and introduce such legislation, it would tie him to that position, and it would be unacceptable on the campaign trail since he would be forever linked to a proposal for a massive tax hike (whether it is justified or not isn't going to get discussed much).
The fact is that Obama is right that Social Security funding is a mess, but if he were truly serious about fixing it, he shouldn't want or have to wait until he's elected President to act. He's in a position to start things right now - as a Senator.
Considering that he's got an empty record as Senator, it would be quite the feather in his cap were he to get something done on Social Security. However, do not expect that to happen anytime soon.
It is the same with the other Congressional candidates. They all talk about what they will do, but when you look at their record, you seen nothing but a blank slate. Candidates do not want to do anything that might tie them to a position that might affect their chances in the primaries or the general election, so they miss votes that might have consequences going forward, or they make proposals for what they'll do as President when they have more than adequate opportunity to act while in Congress.
Profiles in cowardice. (HT: Gaius at Blue Crab Boulevard)
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