Seniors fear lack of Social Security COLA increase
MARK GORMUS / TIMES-DISPATCH
Alberta Stith, 90, (foreground right) and other participants play bingo after lunch at Good Shepherd Baptist Church.
Statisticians may think the price of everything is staying low, but it doesn't look that way to the ladies at the Friendship Cafe at Good Shepherd Baptist Church in Richmond's Church Hill.
Like millions of Americans who had been counting on a Social Security cost-of-living adjustment, or COLA, increase, they're wondering now how they're going to stretch tight dollars even further.
Next year will be the first without an automatic Social Security COLA since 1975, the agency announced Thursday.
"I've learned to live within it, but prices in the stores keep going up, every time you go shopping for food," said Charlotte Coleman, 77, one of the volunteers at the Friendship Cafe. "I just buy what I really need."
Medicine is the big worry. The Social Security COLA is pegged to the Consumer Price Index for wage earners. Medicines of all kinds have just a 1.65 percent weighting in the index, though medicine takes a bigger bite of many seniors' budgets.
"You have to have medicine, and it keeps going up," said Alberta Stith, 90. "You just have to do without other things."
She cuts back on clothing, on activities -- bingo at the Friendship Cafe is a treat -- and sometimes, on food.
Rent is another big worry. While the average monthly benefit for retired workers is $1,160, the market rent for a one-bedroom apartment in Richmond is $832, according to the U.S. Department of Housing and Urban Development.
"You have to buy what you have to buy. . . . We don't have a choice," said Queen Wilson, 85. "My rent just went up. I'll try to manage."
At Senior Connections, The Capital Area Agency on Aging, the Social Security benefits freeze is worrying.
"We're hearing from a lot of people already, having trouble with utility bills and paying for food on the table," said Thelma Bland Watson, executive director.
More people are asking for help from the nonprofit group's emergency fund for rent, heating bills and medicine, she said. The 20 Friendship Cafes it has set up in area churches and senior centers are busier as well.
The agency steers people to help from federal and state programs, and it also counsels seniors on budgets.
"You're never stuck," said Robert A. Fishbein, vice president and corporate counsel for Prudential Financial Inc.
"It's never too early and it's never too late to do something about your situation."
Fishbein suggests starting with your bills, to get a sense of what you're spending. Next, think about other expenses, or possible expenses, that might come up.
Then, tally up your income. Think about where the economy is -- low interest rates on savings squeeze many retirees' budgets, and you'll need to think about how long rates could remain low.
"Too many people think 'I've got 'X' amount in the bank' instead of 'What does that really mean?'" he said, referring to the flow of cash an asset generates -- the way a CD does, or a health plan that covers you when you retire.
It's important to plan, review and be ready to change your plans, Fishbein said.
After all, there still may be more bad news to come: The Congressional Budget Office already has forecast that there won't be a COLA increase in 2011, either.
Contact David Ress at (804) 649-6051 or
.
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Reader Reactions
Posted by ( headhog ) on October 19, 2009 at 6:33 pm
I would suggest is that the first $250K of earned income be taxed. I would then increase the amount taxed by the rate of inflation each year. There are other steps that could be taken, but that would be the first.
I think all income should be subject to the SS (and) medicaid tax. I don’t agree with increasing the rate on those making over 250K as that smacks of “income redistribution” and punishment for being successful.
The paycheck I got on Oct. 15 indicated that I had paid the maximum social security this year. I’m lucky I know. To assure the long term health of SSI one step I would suggest is that the first $250K of earned income be taxed. I would then increase the amount taxed by the rate of inflation each year. There are other steps that could be taken, but that would be the first. Our children would not be supporting us with no hope of receiving SSI themselves.
Social Security was never intended to be a retirement plan. The democrats and AARP have brainwashed the people not to save and plan for their retirement because the “government” will take care of them. Many worked good jobs. Maybe even both husband and wife. The blew their earnings on mega-houses, high dollar vehicles, second homes, boats, expensive vacations etc. Now they are faced with reality and are whining and crying. Well the majority of them voted for their messiah Obama and are seeing the yes we can do it change. Citizens should be required to take a course in retirement planning while still in school.
It can be done. I planned and saved for my retirement and with social security I paid into all my working life have a very good lifestyle. I am far from “having money” but I have enough to be comfortable and not be worried over a $250 payment. If I get it I’ll eat out more. If I don’t I will eat at home.
I say they should stop Social Security payments starting January 2011 for anyone under the age of 60! It would be record number of people scrambling for jobs and a huge shortage of people at Bingos, Casinos, and nightclubs!!! It would be record number of children put up for adoption as single mothers ditch their “checkless children” to maintain their hair and nail appointments!!!
It might be the answer to reducing the homeless, the poverty-stricken, and the abused children of this country….just STOP THE PAYMENT TO ANYONE UNDER 60!!! Let the families take care of their own!
What is a Ponzi scheme?
A Ponzi scheme is a fraudulent investment instrument where the capital provided by new investors is pooled together and used to pay off old investors at their time of withdawl. Investors are tricked into thinking that their investments are being seperated into an account that they will one day access when in actuality their money has already been sent to withdrawing investors. As long as the money coming in is greater than the money going out, nobody knows the difference.
Your paycheck deductions for SSI are not going to an interest bearing account with your name on it. Your SSI checks (that anyone under 50 might not see) will come from the contributions of workers that are currently employed at the time of your retirement (withdawl).
I defy any politician to distinguish between the Madoff scandal and Social Security. It is a complete scam.
SS won’t be around in any meaningful form by the time I get there. From July through September, the SS Trust Fund started running monthly deficits. This was supposed to be a 2037 problem according to their projections, not a 2009 problem.
Posted by ( blackbeered ) on October 19, 2009 at 11:38 am
I don’t know what your current lifestyle
“Current lifestyle” as defined in the calculation for the $1 million minimum was defined as being the average middle class family: 1500 - 2500 sf home, couple of cars, utilities/gas/groceries, basic services (i.e. cable tv, telephone, internet)and some extra spending money for entertainment, restaurants, etc.
I don’t know what your current lifestyle is but unless it’s living over the subway grate in downtown DC, a million $ “nestegg” won’t be nearly enough.
But, if you have that nestegg now, make sure to grow it at a rate at least twice the inflation rate.
And think of any potential Social Security “benefit” as “coffee money”. Remember, it was NEVER meant to be a retirement plan.
Being 24, your generation’s situation is more dire.
It is. 75 is the new 65 for my generation, and we will have to have a minimum of $1 million in savings just to maintain our current lifestyle under the current system. My friends who were business majors were taught in college to pretend SS doesn’t even exist because no one in our generation will benefit from it. We will have to rely on private investments to fund our retirement.
But like you said, Dems need the people to be dependent on the govt. so they can stay in power, reaping the rewards. The worst part is my generation is more liberal than the past and if we don’t get some pioneer Republicans instead of these spine-less weaklings that cave in to the left and the radical right, this trend will continue to get worse.
Hey ProudAmerican24,
I’m 62 and I couldn’t agree with you more.
This was the “Privatization of Social Security” plan the Republicans pushed and the Dems shot down. [And now that the stock market crashed for 24 months, the Dems will forever use that to keep it down.]
Why don’t the Dems want this? The Dems want anything that will make people more dependent on the government while the Reps want just the opposite. That’s the major difference between the ideologies.
As I said, I’m 62 and I just started drawing my Social Security “benefit”. If I live another 26 years, I will have received back every penny I contributed over 40+ years ... a 0% return in current dollars [about 50% loss in buying power]. If I live to be 120, I will have received a rate-of-return equal to 20% of what the DJIA has returned from the inception of Social Security in 1935 through September 2009.
Being 24, your generation’s situation is more dire. You need to start voting Republican in your local, state, and federal elections. Remember, there’s 11 to 30 million “new Dems” in this county [the needy fleeing Mexico and Central American].
Good luck ... and thank you for this month’s check.
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