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Social Security payments in 2010
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The Social Security Administration will set the 2010 rates in October 2009.
Experts are predicting that because the annual cost of living increase is based on inflation, which is expected to be low, individuals on Social Security may not qualify for any increase.
Older Americans have learned to depend on annual increases
Automatic cost of living adjustments (COLA) for Social Security started in 1975. Since that time recipients have received an increase every year.
50+ million seniors who have learned to depend on the automatic annual increases will be negatively affected if there is no adjustment in 2010.
According to the Social Security website, since 1975 the smallest cost of living increase was 1.3 percent. In 2009, the increase was 5.8 percent, a number that provided some comfort to recipients who have suffered a loss of buying power due to the recent damage done to savings in equity investments and real estate.
Fortunately, Social Security beneficiaries will receive a one-time $250 stimulus payment in 2009 to help make up for the loss of the cost of living adjustment.
Seniors suffer during periods of low inflation
When the cost of living is low, that should mean Social Security recipients will benefit from the stable cost of goods and services. However, one expense that seems to be resilient to low inflation is health care. Whatever the cost trend of other products and services, health care costs continue to rise unabated – and that unfortunately affects older citizens disproportionately.
Our oldest citizens have reason to worry. They cannot make up for economic hard times by returning to work. One can only speculate how much our lawmakers will do to help elderly Americans in this crisis.
Poorer elders will need to do with less, and seek more help from social services
Unfortunately, social programs for the elderly are also being cut. Except for AARP, the American elderly have limited political influence.
One sad fact is that even while we cut vital services for needy and oftentimes helpless seniors, our lawmakers and the courts have required us to provide adequate funding for comfortable prisons and first-rate health care for felons and murderers.
We have also unwisely borrowed from Social Security to pay for other federal programs. That does not bode well for a system looking at millions of people about to need financial assistance in retirement.
What are the likely fixes to Social Security
If the system is to survive, the probable fixes will be higher payroll taxes, raising the current retirement age, having higher income workers pay FICA tax on their entire income, and changing the cost of living formula.
Maybe the answer lies within the problem. As American legislators procrastinate, our nation’s population continues to get older. As the number of senior citizens increases, so will their voting power, and nothing attracts the attention of politicians like a huge block of dissatisfied voters.
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