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    Default COLA - Screwing Retirees, the Disabled and Veterans Since 2000

    For those of us that have an income that's tied to the yearly COLA, CPI-W, increase, in recent years we've seen years where we got NOTHING, notably during the kenyan's administration, and also years we've seen increases that weren't much more than an insult, and since around 2000, we've seen things get worse and worse. I was hoping Trump would address this issue, but apparently that isn't going to happen. Congress would rather have their partisan fights about it and never get anything done, so a flawed system just remains in place.

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    No amount of COLA can close this gap

    Of course, the thing to remember about Social Security's COLA is that it's not designed to help program beneficiaries get ahead. Rather, it's a measure that was put in place so that beneficiaries didn't see their Social Security dollars gobbled up by inflation over time. Unfortunately, that's exactly what's happened.

    According to The Senior Citizens League, the purchasing power of Social Security dollars for seniors -- retired workers make up 70% of program recipients -- has declined by 33% since 2000. In other words, what $100 in Social Security dollars used to buy in 2000 will now allow an individual to buy only about $67 worth of those same goods and services.

    The biggest issue with Social Security's COLA is that the CPI-W is inherently flawed. As its official name suggests, the CPI-W tracks the spending habits of urban and clerical workers. Urban and clerical workers are typically of working age, not receiving a Social Security benefit, and they spend their money very differently than senior citizens. What winds up happening is that very important expenditures, such as shelter and medical care, are underweighted in the CPI-W, whereas less important costs to seniors, such as education, apparel, and transportation, have higher weightings, leading to seniors losing purchasing power on their Social Security dollars more years than not.

    The greatest irony here is neither Democrats nor Republicans believe the CPI-W is doing a good job of measuring inflation. However, the solutions they've proposed are miles apart, meaning there's virtually no chance of gaining consensus or finding a middle-ground solution to improve how the rising cost of goods and services is measured by the program. This means that no matter what sort of "raise" is passed along to beneficiaries in 2020, it may not be keeping up with the true inflation that program recipients are contending with.

    https://www.fool.com/retirement/2019...2020-cola.aspx
    Last edited by High_Plains_Drifter; 09-03-2019 at 10:30 AM.

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