Sunday, February 14, 2016
Just a Wrong at Sunset
I have friends who do rants a lot, but it isn't usually my style, so maybe I can be indulged if I should.
First let's clear out of the room those cold-hearted, frozen-brained, hand-always-patting-their wallet fools who might claim I am another person feeling entitled to live on welfare and therefore not supposed to complain about how much more I haven't had doled out to me.
There are those out there who constantly refer to Social Security as an entitlement and placing those of us receiving it as just another welfare group.
Well, let me explain something to you about Social Security. It is an entitlement, I grant, because it has been bought and paid for by me and my fellow recipients on the promise we were investing in our old age security. That's right, we bought and paid for it and so are entitled to the benefit by contract, not by charity nor mercy nor bleeding-heart love of we elderly. Social Security is in essence and in fact an annuity.
An annuity is a contractual financial instrument. The simplest description is this, a person pays a sum of money to some entity, usually over a period of time, and at some point such payments end and that entity pays a promised benefit to the person. This can be as a lump sum, but is often in the form of a regular cash flow over a stated period of time. Quite often this period of time is the remaining lifetime of the person who purchased the annuity. Such annuities are commonly sold as retirement accounts and peddled by financial institutions and insurance companies.
Thus Social Security is just a form of annuity. The biggest difference is there is no choice in the matter. One doesn't look at the market place of annuities and decide one will purchase Social Security; one is forced by law to buy in. As long as a person is working and receiving a paycheck, that person is paying a set percentage of that paycheck for the annuity of Social Security. Unlike other such investments, however, there is no set end date on payments. As long as a person continues to receive a paycheck, even if they are already receiving the payout benefits, they will be charged that percentage of income for this annuity, although it will not gain them additional benefit.
I have no kick with that. I just want it understood I have a right to speak my mind without being accused of being ungrateful, because I am not receiving a gift but the promised payout for my purchase of this annuity, which I paid steadily for 52 years, for my initial payments began when I was 18 and did not end until I was 70.
If the government did a poorer job of funding their annuity product than perhaps certain insurance companies or private financial organizations did, that is not my fault. I upheld my obligation to make my premium payments, it is up to them to honor their payout commitment.
In 1973 there was another government promise made connected to Social Security and put into effect in 1975. This goes by the common name of COLA and it is not a soft drink. It is a cost of living adjustment, reasonably enacted by Congress to keep the Social Security benefit abreast of inflation or the rising cost of living. It is tied to the CPI-W.
The CPI-W is shorthand for the Consumer Price Index for Urban Wage Earners and Clerical Workers. You can see why they needed a shorthand. Most years we have seen a rise in the CPI-W and there was a small increase given each time to those on Social Security. The years of the Obama administration, however, have produced consistently low COLAs and is the first period since COLAs went into effect where there was a zero adjustment made; actually, three such zero adjustments, in 2010, 2011 and now 2016.
Theoretically, getting a zero COLA means there was nada increase in our cost of living.
Does anyone in Washington ever go to the grocery store? Do some shopping, my friends, then come back and tell me there is no inflation.
Curiously, when President Obama announced there would be no raise for Social Security recipients in 2016 he did not say it was because their was no inflation. He said it was because of the drop in gasoline prices and that difference would offset any other cost of living for seniors. Balderdash!
As a senior citizen my auto fuel costs are perhaps the least of my living expenses and one of the more discretionary. Sure, I use my car to get around, like to church or to the grocery store and such, but nowhere near like I did when I was pre-Social Security and working. It may be nice to take a little jaunt into the countryside on a summer's day, but not necessary as getting to a job was. My costs are in food and medicines and doctors and other things that come with age. As a result of no COLA, I and my wife actually receive less income now. It is true our Social Security did not go down nor did our Medicare payment go up, but our supplemental health insurance did go up. It doesn't stop going up because gas prices went down. That insurance is paid out of our Social Security, so our net shrunk, while almost everything else we spend money on also went up...except that gasoline.
The sorry little truth is that the government knew and knows that the cost of living for seniors did rise. They know this because they keep a CPI-E and it is to this the COLA should be tied, not the CPI-W. The CPI-E is the Cost of Living Index for the Elderly (those over age 62).
If the CPI-E had been used the average Social Security recipient would have received about $44 a month more in 2016 rather than zero.
Okay, my rant is finished. I guess I could find a related one if I tried, like why isn't Minimum Wage tied to an index, as commonsense would dictate, rather than being a political football every couple years?
Gee, aren't these kitty-cats cute? No, wait, that could lead to another purrfect ranting.