Monday, October 26, 2009

No Social Security Raise For 2010, at Least for Now

No Social Security Raise For 2010, at Least for Now

On August 31, I posted a blog about the then speculation that there would be no increase in Social Security benefit checks –affectionately known as COLA (Cost of Living Adjustment) – in 2010. If you did not read it, please do or simply refresh your memory.

Well, it’s now officially a fact and reality. But, that’s not really the point of my discussion today, because I’m pretty sure you’ve already heard this announcement. I’m no political blogger, but I have noticed an incredible –and I do mean AMAZING – situation where both Democrats and Republicans agree on something, but still manage to spin it to their perceived advantage.

A Democrat friend of mine sent me an email stating that seniors depend on these checks, so the good Democratic party is asking Congress to approve a $250 check for each Social Security recipient to make up for the COLA shortfall. The message here: The Democrats care and are looking out for seniors!

Then I received a Republican friend’s email: Don’t vote for the Democrats in 2010 because they are refusing our senior’s COLA while they approved raises for themselves (referring to Democrats in Congress).

Don’t you find it amazing that each agrees that the elimination of COLA is bad, yet they still find a way to say they are better than the other?

Beyond the Politics, There’s REALITY

I appreciate our seniors a lot, and want them to live happy, comfortable lives, especially after having toiled and helping make this nation the best and most powerful on the planet. But there’s more to consider:

Social Security is the largest source of income for most elderly Americans today, but Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire. Saving and investing wisely are important not only for you and your family, but for the entire country.

Okay now, would you believe me if I told you the paragraph above was taken directly from the Social Security Administration? Well it was! I know you trust me, but just for the record, let me give you the official form number: Form SSA-7005-SM-SI. This is the green and white statement you receive each year – around your birthday – from the Social Security Administration. Their EXACT wording, right from the front page.

Three Quick Things

First, please do not count on the government for your retirement. Use it as the supplement/bonus that it’s supposed to be. You might be devastated if the forecasts of the Social Security trustees turn out to be true, even partially. Actually, those are not even my words; they are the government’s.

Secondly and technically, COLA data provided by the same institution that has been tracking it since it was instituted in 1975 show that it was negative, prices actually fell. I know it sounds ridiculous, but in this case, a deal is a deal. Right?

Thirdly, there are some who argue that the government cannot freeze the increase in the checks because many seniors lost significant portions of their retirement funds due to the stock market crash. It seems to me the blame should be shared between the “so-called financial advisors” and seniors who bought into the completely bizarre idea that it’s OK to gamble their hard-earned nest eggs IN the stock market, especially at this point in their lives.

FACT Flash

The stock market can delay or completely ruin your retirement, yet there are those who did not lose a penny of their investments’ value over this whole stock market’s tsunami. And they are on track to make competitive gains this year. I know because they are our clients!

Having said that, I would like the record to show that I am in favor of Uncle Sam doing whatever possible to help distressed seniors. Growing up, my mom used to say, “When your child takes a leak on your feet, you don’t – literally – chop them off. Instead, you clean them.” But notice, that does not – or at least is not supposed to happen – forever, right? In case you were wondering I was a good kid … sometimes.


To take charge of YOUR retirement, regardless of your age, please schedule your no-obligation consultation today! You may also call us (301) 949-4449

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