Not Much for Social Security Recipients

Social Security cost of living increase too smallSocial Security recipients, 55 million strong, will get a 3.6% cost of living increase next year. There has not been a cost of living increase from the fund in three years. This one is so small that it may harm consumer spending. It certainly will not help it, another likely drag on GDP.

Real wages across the U.S. workforce have struggled to keep pace with inflation. This can be attributed to joblessness. Or, perhaps to improved productivity. Whatever the cause, the consumer economy cannot grow if people have little discretionary income, particularly compared to what they had a decade ago. Employers benefit form the ability to improve margins as they squeeze pay. But it hurts many businesses over the long haul because the consumers of their goods and services lack purchasing power.

The Social Security cost debate is at the core of arguments about how the deficit might be reduced. Seniors and senior groups like the AARP continue to press Congress to keep current benefits in place. Most economists know that there are no long-term solutions to the U.S. debt crisis if Social Security and Medicare continue to be paid at current levels. Actuaries say the government cannot afford it. That may hurt the ability of baby boomers to keep the consumption patterns they had in pre-retirement. But the stress on the economy for lower standards of living does not have to wait for boomers to retire en mass. The trouble caused by low retirement payouts is already here.

Millions of American count on Social Security as the foundation of their retirement funds. A 3.6% increase in payments is often matched by retirement portfolios with yields damaged by equity market carnage and extremely low interest rates. That thins out the number of retired people who have any discretionary income at all.

An increase in Social Security would be an economic stimulus of sorts. And a large increase would help the economy. Washington cannot afford it. Mark it down to another program that austerity will undermine over time. Consider as well what will happen to consumer spending as today's Social Security recipients and those of the next few years become prisoners of a lower standard of living. An increase in payout of 3.6% based on a three-year wait is barely enough to cover the cost of housing and essentials. --Douglas McIntyre


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33 Comments

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from Detroit

be frugal

November 02 2011 at 3:24 PM Report abuse rate up rate down Reply
rtgarton

Take SS at 62 yea its less but you could take it at 66 and drop dead a year later.

October 31 2011 at 7:12 PM Report abuse rate up rate down Reply
nthereoff

I'll give you the last two years increase. Nothing for the first year and nothing for the secongd year. Don't say I didn't give you nothing

October 25 2011 at 6:47 PM Report abuse rate up rate down Reply
joethightwad

Anyone here upset by the size of the cost of living adjustment is perfectly free to give it back.

October 25 2011 at 9:55 AM Report abuse rate up rate down Reply
1 reply to joethightwad's comment
pipetsa

ARE YOU RICH OR A YOUNG KID? I HAVE PAID INTO SOCIAL SECURITY FOR 46 YEARS AND I STILL PAY IN BECAUSE I STILL WORK, DO YOU DO ANYTHING?

October 25 2011 at 11:22 AM Report abuse rate up rate down Reply
nthereoff

Actually us old folks will be spending more. More for gas more for electric more for heating and more for insurances. No raise in the last two years ,No inflation you know? We are getting an 3.6 raise this year. Over the last 3 years If you adv it out. It comes to 1. 2 a year. for those years . What are we going to do with all that money? Play lotto you never know?

October 24 2011 at 3:44 PM Report abuse +1 rate up rate down Reply
hustonlaw

Okay, I give up: how does receiving more money as a result of the inflationary adjustment mean that old folks will actually spend less?

October 24 2011 at 12:53 PM Report abuse +1 rate up rate down Reply
pedro

YeuPp idiots like ourself dramatically most parts is nifty to take advantage on but most bills keep piling up in myccabinet is tumbling preasure. I consider paying my mortgage, communications and credit card(s) bills and refused keeping for lunch.

October 23 2011 at 12:57 PM Report abuse rate up rate down Reply
anthonygolfbones

Its noy only Social Security but retiree's such as myself are being told that are pension funds are way under funded and we have had to give up benefits and pay more for our health care. I retired from General Motors UAW, the UAW recently signed GM to a new contract promising profit sharing and big bonuses and less co-pay on doctors visits these benefits are for people who make more in overtime then thier base salary,the retired people already lost bonuses and COLA pay raises and were completely left out of the new contract we even lost a 600 dollar Christmas bonus which was at one time 1000 dollars. The union is telling us that currently thiere are 50,000 working UAW members in the US and 500,000 retiree's and there is no way the workforce can help us out.and GM couldn't afford to . GM just gave out Billions in bonuses Me and 499,999 other employe's paid into the pension plan for over 30 years, I retired 9 years ago with 6 of my closest friends , I am the only one who is still living, very few people draw pension for as many years as they worked and if the pension is under funded then who is at fault.I don't believe the numbers the UAW is throwing at the retiree;s and I think they are just telling us that our pension has been squandered away .The letter and the numbers and the lame excuse can be found on the UAW.com webpage then select retirees and tell me how you interput thier mumble jumbo.

October 22 2011 at 5:19 PM Report abuse +1 rate up rate down Reply
anthonygolfbones

Its noy only Social Security but retiree's such as myself are being told that are pension funds are way under funded and we have had to give up benefits and pay more for our health care. I retired from General Motors UAW, the UAW recently signed GM to a new contract promising profit sharing and big bonuses and less co-pay on doctors visits these benefits are for people who make more in overtime then thier base salary,the retired people already lost bonuses and COLA pay raises and were completely left out of the new contract we even lost a 600 dollar Christmas bonus which was at one time 1000 dollars. The union is telling us that currently thiere are 50,000 working UAW members in the US and 500,000 retiree's and there is no way the workforce can help us out.and GM couldn't afford to . GM just gave out Billions in bonuses Me and 499,999 other employe's paid into the pension plan for over 30 years, I retired 9 years ago with 6 of my closest friends , I am the only one who is still living, very few people draw pension for as many years as they worked and if the pension is under funded then who is at fault.I don't believe the numbers the UAW is throwing at the retiree;s and I think they are just telling us that our pension has been squandered away .The letter and the numbers and the lame excuse can be found on the UAW.com webpage then select retirees and tell me how you interput thier mumble jumbo.

October 22 2011 at 5:19 PM Report abuse +1 rate up rate down Reply
azdncr4u

So what happened to Obam's promise to eliminate income tax for seniors making less than 50K? Does he think we are going to forget that? No way. My rent has gone up $25.00 a month for the past three years and for next year. A lousy 3.6% is not much help but I'll take it.

October 22 2011 at 8:25 AM Report abuse +7 rate up rate down Reply