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You are correct about reduced spending for older folks, other than health care.
There is also a lot of talk about adjusting the COLA to incorporate the 'real life' scenario of how consumers respond to increased pricing of certain items....they switch to another item. When the price of beef skyrockets, people buy less of it and more chicken or turkey or pork. So in essence, they are not paying more for food, they are simply buying different foods and keeping their food costs constant. These market forces are not currently reflected in COLA, though they can be, and ought to be.
Too many SS retirees are happy to get an over-valued COLA when they really ought to stop and think how much of a drain an unnecessarily high COLA is on the longevity of the current SS system.
As a poor person, I am already at the bottom of the substitution chain; I have run out of cheaper substitutes and must do without if prices rise further.
As a poor person, I am already at the bottom of the substitution chain; I have run out of cheaper substitutes and must do without if prices rise further.
Wouldn't a chained CPI COLA screw people like me?
Many would say you have been screwing yourself over the years. Chained CPI would just be keeping with the pattern. Just saying, not that I agree.
If we could afford it, the CPI-E makes much more sense. But it's not really about which CPI is an appropriate COLA measure for Social Security retirees. It's about making cuts.
Although a reader would not realize it from the language used in the Heritage report, the CPI-W is not a measure of a pure price increase. IOW, it does not reflect the price changes of particular items. Rather it assumes that purchasers will switch to a lower cost item within the same strata, i.e., if the price of steak increases by a certain percentage, shoppers will substitute ground beef. As the Chief Actuary of SSA points out, the Chained CPI assumes that the shopper will cross strata, i.e. purchase a flat screen TV rather than a car when the price of a car rises a certain percentage compared to the flat screen TV. There is no true substitution.
I'm not objecting to the adoption of the Chained CPI (as long as certain measures are implemented to protect the vulnerable 80+ year old retirees) but I do object to the BS rationale behind the proposal.
If we could afford it, the CPI-E makes much more sense. But it's not really about which CPI is an appropriate COLA measure for Social Security retirees. It's about making cuts.
Although a reader would not realize it from the language used in the Heritage report, the CPI-W is not a measure of a pure price increase. IOW, it does not reflect the price changes of particular items. Rather it assumes that purchasers will switch to a lower cost item within the same strata, i.e., if the price of steak increases by a certain percentage, shoppers will substitute ground beef. As the Chief Actuary of SSA points out, the Chained CPI assumes that the shopper will cross strata, i.e. purchase a flat screen TV rather than a car when the price of a car rises a certain percentage compared to the flat screen TV. There is no true substitution.
I'm not objecting to the adoption of the Chained CPI (as long as certain measures are implemented to protect the vulnerable 80+ year old retirees) but I do object to the BS rationale behind the proposal.
I have similar concerns about chained CPI and would support a dual CPI measurement based on income. Chained over a certain amount and the current for under.
Well, even though we keep hearing interest rates will rise, any day ... week .... month ... year ... thus far, the QE continues apace. And out there in the great beyond there are now at least a handful of places that are in secular deflation. Some say the US is immune to this. Some also said that the boom of the 00s would go on forever. Oooops.
For anyone the longer u wait to claim benefits the greater the yearly and compounded increase. A combined benefit of 50k with an annual 1.65% COLA compounded is $54,263 after five years. If you have a pension or pensions the combined COLA impacts over time can be considerable.
By taking my SS at 62 I would receive $56,538 by age 66 and 4 months. It would take me until age 77 at the increased amount of $400 to get the $56,538 back. I am not working, so my SS is not reduced because of earned income it does not make sense for me to wait. I know that each person has to make that decision based on their circumstances and we do not know how long we will live;for me a bird in the hand is worth two in the bush. Also, my SS payment will receive the colas from 63-66 anyway. I say take the money and run.
Most of my relatives in their 70s have zero house payment, my sister will have her house paid off 3 months before she retires. Using her SS benefit from age 66-69. I rent a lot for my mobile home $326 per month, housing is not a big cost factor for me. But food, energy, and gasoline are. Also, in 42 months at age 62 I will be debt free. Retirement for my wife and I will be the golden years in which we should be able to live comfortably and travel when we want to. It just takes a little planning
I had rental property back in the 80s and was able to offset taxes on Air Force Income. And then sold the house for a profit of $15,000 If you are losing money you are doing something wrong. You complain about a new roof or furnace but you should get 20 years of use out of the improvements. Also, how many months of near zero costs did you have before you had to spend the big bucks. And if you sell you can ask more because the house has a new roof and furnace. If having rentals was a losing proposition why are so many people doing it? Because someone else pays the mortgage for you (the renter) and you get the profits. You can fool some of the people but not me. Been there done that.
Well, even though we keep hearing interest rates will rise, any day ... week .... month ... year ... thus far, the QE continues apace. And out there in the great beyond there are now at least a handful of places that are in secular deflation. Some say the US is immune to this. Some also said that the boom of the 00s would go on forever. Oooops.
No, the QE is NOT continuing apace. Where have you been? The Fed has been reducing the QE substantially each month for a while now in order to phase it out completely, and the QE will be gone entirely in another month or two or three. (Sorry I don't remember the exact time line).
I have similar concerns about chained CPI and would support a dual CPI measurement based on income. Chained over a certain amount and the current for under.
Its not a part OF SSS law tho.That would be discrimination based on success. We already have some paying higher Medicare and higher taxes on SS based on income.Plus SSI for those federal government thinks neds further support ;plus food stamps and other programs.
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