How Social Security increases are determined - and how they should be

Just click on the link below to read my article on how Social Security increases are determined, and how they should be. 

http://ezinearticles.com/?The-Un-COLA-Social-Security-Increase&id=7432154

We need to know some facts before I continue. The average Social Security benefit paid out each month is $1234.00. The COLA increase to SS recipients averaged $21. For many, the Part B Medicare increase exceeded the COLA increase. Now, both the House and President Obama are looking at changing the calculations used for the inflation index. Some claim it is too high, a whopping 1.8%. They argue it should lowered to a "chained-CPI", which would provide increases of a laughable 1.4%. Social Security recipients spend a larger portion of their income on healthcare, and those costs have been rising disproportionately faster.

The current CPI stands at 1.8%, ex-food and energy. That means the Bureau of Labor Statistics does not include the costs of food and energy. They claim the prices are "too volatile" and would distort the index. But the reality is that we all eat and most of us use energy and drive. However, the BLS (Bureau of Labor Statistics) is developing an experimental CPI for seniors. That report, though not "official" shows that the real inflation rate for folks over 62 is 3.3% - almost double what the current COLA increases are based on. You can view the full report by visiting the Bureau of Labor Statistics website.

I consult with seniors and their families everyday as a reverse mortgage consultant. Many clients are just exhausted from searching for ways to make ends meet. They do not have extravagant life styles, nor do they demand the latest tech gadget or 1000 channels on TV. They live frugally, and have been good stewards of what they have been given. Age and health prevent limit their ability to generate income.

There are no easy answers to this problem. But we cannot have any progress if our leaders and "thinkers" refuse to recognize the problem itself. It reminds me of a comedian who said "I can't be out of money, I still have checks in my checkbook". That the attitude economists and politicians are taking on so many issues. They give answer to "4+4=8", but the question was "what is 5 times 3?".

There are professionals who help seniors with their budgets, who go to bat for them and dispute incorrect charges for utilities, prescriptions, etc. One excellent provider is Michiana Money Management. The owners review those shoe boxes of receipts, the bank statements that have unexplained and ambiguous debits. They even negotiate better terms on some services. Seniors need more advocates, especially since the government is not going to be one. In fact, they appear to be doing the opposite.

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