Social Security and Inflation

We “Greedy Geezers” will not be getting an increase in our monthly Social Security benefit payments in January, because the CPI is still below what it was in 2008. Stories on the Web are talking about how unhappy recipients will be to not get an increase, especially because the CPI rose about 1 percent over the past 12 months. Of course, I didn’t hear any complaints from recipients in 2009, when their benefits remained unchanged while the CPI dropped; nor was there any complaint when benefits were “over-indexed” between 2007 and 2008. This is a classic illustration of asymmetry in perception-“what’s mine is mine, what’s yours is negotiable.” Proposals to give a special $250 increase this year to recipients are politicians’ sop to this perception bias.

Wouldn’t the country be better off if politicians explained why the current system makes sense rather than catering to people’s mis-perceptions? Or if they were honest and modified the system to allow for benefit cuts when the CPI drops? (Fat chance of that!)

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  1. L. F. File says:

    Seems to make sense but when the CPI drops or is even flat the economy needs stimulus. Why would you not provide more income it to the very people that will almost certainly spend it?


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  2. Hamed says:

    Agree with many of the previous points, although I’d add:

    The biggest reason that politicians are so keen to offer ‘sops’ such as the one-off payment to pensioners, is because they are so much more likely to vote than any other age group. Decisions are made by those who turn up, and people my age (29) are more likely to stay home (or go to the pub) on election day.

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  3. Frank J Pastore says:

    The CPI formula for SS recipients is a big joke. Isn’t it true that congress passed legislation to automatically get raises every January? Social Security is not a government handout. I paid into that fund for over fifty years, that is our money. If past presidents and congresses would stop stealing that money there would be no Social Security problems. Just pass legislation for a Senior Citizen CPI so we can recieve our COLA’s every year.

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  4. I wonder says:

    I wonder whether a little blunt communication would help. I’m imagining something like adding a paragraph like, “Because the recession reduced wages, the baseline index went DOWN this year. If we counted this downturn, your check would be rightfully $28.14 LESS every month this year. However, Congress said not to remove money from your check, as it might cause a hardship for some recipients. Amounts will not rise again until the index has gone up by more than enough to offset this extra $28.14 overpayment — which may take several years.”

    If we’d done this in 2008, nobody would be “surprised” by this now.

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  5. Lawrence Clarke says:

    What is the explanation for removing food and fuel prices from the COLA calculation???

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  6. tateofpa says:

    Wow it will be there for another 35 years, great I’m 50 so I will get my SS. My kids I told them that they would get theirs when they retired, I just didn’t tell them that they will have to work till they were 90+ before they can retire. You know that those without kids should have to work longer, because they didn’t plan like I did for retirement by having kids to take our place, for the government to tax.

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  7. luigi remus says:

    I would like the editors to explain how adjustments to SS benefits are calculated. CPI? COLA? Food and fuel are in or out? Why? If your salary goes down and/or SS benefits stay the same while your bread, milk and gas go up are you better off?
    The editors could make a major contribution to education by contributing their comments.

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  8. tateofpa says:

    I would bet that it is more libs complaining.

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