Social Security, the CPI, and Gasoline Prices

Originally posted by JS357
The COLA is adjusted annually. Seniors don't drive as much as commuters. Their medical costs are higher. What's to dispute? edit: Some years the seniors get more, some years less, but it more accurately reflects their change in cost of living.

To dispute is whether or not gas prices (when combined with many other factors) are a good proxy for inflation. Whether or not seniors drive is really totally irrelevant.

Originally posted by twhitehead
To dispute is whether or not gas prices (when combined with many other factors) are a good proxy for inflation. Whether or not seniors drive is really totally irrelevant.

It's just that it is easier to use the general measure of inflation to correct Social Security payments than to come up with separate ones for each type of benefit. Sure, some years people will lose out, during other years people might gain a little, but overall the system works reasonably. If you are worried about seniors not getting enough money it's probably a better idea to increase payments by a flat amount rather than fiddle with the inflation metrics.

Originally posted by Kewpie
Most of today's seniors know how to adapt their spending to their circumstances, and can do so adequately provided that the changes are gradual. For example, few drive huge vehicles or live in houses costing too much to maintain. Providing free medical care to those in most need of it would give a boost to the ill ones without providing windfalls to the hea ...[text shortened]...
It will be another matter when the generations who never learned how to save reach retirement.

"It will be another matter when the generations who never learned how to save reach retirement."
The employment situation in the U.S. is quite dim right now. The cost of essentials like housing and transportation on top of college debt make saving for retirement very, very difficult. Even food has risen sharply over the past few decades, especially meat and fresh produce. The least expensive foods to fill a stomach are junk full of corn syrup which is cheap due to tax supports (welfare) for King Korn. Plus job security is at an all time low no matter whether your collar is blue or white. Workers are dispensable. If we are to change this scenario, we must find ways to manufacture goods and services that are too sophisticated to be easily carried off shore. To do this, we need to focus on developing a highly educated population that can create and manufacture these new goods and services. Rather than giving tax dollars to those growing crops that are unhealthy, how about price supports for healthier food. Finland did this years ago. I know I seem a bit off topic but it's all part of a bigger complex web.

Originally posted by twhitehead
To dispute is whether or not gas prices (when combined with many other factors) are a good proxy for inflation. Whether or not seniors drive is really totally irrelevant.

I have found that there is an "experimental" CPI-E (for the elderly) that takes into account the differences between the cost of living for the elderly and the general population.

http://www.bls.gov/news.release/cpi.br12396.a06.htm

Quote:

"The Consumer Price Index (CPI) of the Bureau of Labor Statistics (BLS) measures the average change in prices over time for a fixed marketbasket of goods and services for two population groups. The CPI for All Urban Consumers (CPI-U) represents the spending habits of about 80 percent of the population of the United States. The CPI for Urban Wage Earners and Clerical Workers (CPI-W) is a subset of the CPI-U population, and represents about 32 percent of the total U.S. population.

In addition to the official CPI's for the CPI-U and CPI-W populations, the CPI calculates an experimental price index for Americans 62 years of age or older. The Older Americans Act of 1987 directed the BLS to develop this experimental index."

unquote:

At:

http://www.bls.gov/opub/ted/2012/ted_20120302.htm

It shows that the % of total expenditures for housing and medical are are noticeably greater for the elderly and lower for other areas including transportation and food/beverages.

It is easly to get stuck in the weeds in economics but this link supports my views:

https://www.ncpssm.org/PublicPolicy/SocialSecurity/Documents/ArticleID/1159/The-CPI-E-%E2%80%93-A-Better-Option-for-Calculating-Social-Security-COLAs

quote [bold added]

From December 1982 to December 2011, the experimental CPI-E has tended to rise more rapidly than the CPI-W. Using the CPI-E to determine the Social Security COLA would increase the expected average COLA by about 0.2 percentage points per year. In contrast, using the chained CPI would result in COLAs lower than under current law. COLAs using the chained CPI are estimated to reduce expected average COLAs by 0.3 percentage points per year. That means a typical 65 year-old would see a decrease of about $130 in Social Security benefits using the chained CPI after the change has been effective for three years. At age 95, the same senior would face a 9.2 percent reduction—almost $1,400 per year. The BLS acknowledges the current CPI does not “produce official estimates for the rate of inflation experienced by subgroups of the population, such as the elderly or the poor.” Neither the current CPI-W nor the proposed chained CPI takes into account the spending patterns of America’s seniors. This is why we need an elderly index.

unquote

Originally posted by JS357
I have found that there is an "experimental" CPI-E (for the elderly) that takes into account the differences between the cost of living for the elderly and the general population.

http://www.bls.gov/news.release/cpi.br12396.a06.htm

Quote:

"The Consumer Price Index (CPI) of the Bureau of Labor Statistics (BLS) measures the average change in prices ove ...[text shortened]... e spending patterns of America’s seniors. This is why we need an elderly index.

unquote[/b]

I have never believed this percentage raise system was any good because the more a person gets in the beginning will determine the amount of the raise. Those that receive very little Social Security money will get a very small raise, whereas those that are already getting the maximum amount in Social Security money will get the maximum raise regardless if they need it or not.

I believe it would be better if they determine the exact amount of money that is needed to meet the cost of living increase and give everyone that same amount. That makes more sense to me. The way it is now the rich keep getting richer and the poor keep getting poorer because the increase today is calculated on purpose to make that happen. The poor never get enough and the rich always get too much. It's what they do.

Originally posted by RJHinds
I have never believed this percentage raise system was any good because the more a person gets in the beginning will determine the amount of the raise. Those that receive very little Social Security money will get a very small raise, whereas those that are already getting the maximum amount in Social Security money will get the maximum raise regardless if t ...[text shortened]... ke that happen. The poor never get enough and the rich always get too much. It's what they do.

"...those that are already getting the maximum amount in Social Security money will get the maximum raise regardless if they need it or not."

A thread about means testing might be informative.

Originally posted by JS357
"...those that are already getting the maximum amount in Social Security money will get the maximum raise regardless if they need it or not."

A thread about means testing might be informative.

Social Security is already means tested to limit the maximum amount that can be received from Social Security. The Democrats have been against making any changes to Social Security. The Democrats have noticed the continuing increase between the highest income wages and the lowest income wages, but have decided to ignore any long term change to the Social Security formula.

Originally posted by RJHinds
Social Security is already means tested to limit the maximum amount that can be received from Social Security. The Democrats have been against making any changes to Social Security. The Democrats have noticed the continuing increase between the highest income wages and the lowest income wages, but have decided to ignore any long term change to the Social Security formula.

Any change resulting in higher benefits, will just hasten the demise of the entire system.

Originally posted by JS357
"...those that are already getting the maximum amount in Social Security money will get the maximum raise regardless if they need it or not."

A thread about means testing might be informative.

SS is already somewhat means tested. Someone who has worked and entire career paying maximum FICA taxes, and someone who has worked and paid the bare minimum don't receive proportional benefits. Not even close. Further means testing would make it more of a welfare system than it already is.

Originally posted by normbenign
Any change resulting in higher benefits, will just hasten the demise of the entire system.

What hastens the demise of the system most is the Government raiding the Social Security Fund and Democrats refusing to reform the system. Yet they claim to be fighting for the low income people in the society. What a crock of shyte.

Originally posted by RJHinds
Social Security is already means tested to limit the maximum amount that can be received from Social Security. The Democrats have been against making any changes to Social Security. The Democrats have noticed the continuing increase between the highest income wages and the lowest income wages, but have decided to ignore any long term change to the Social Security formula.

The so called SS trust fund, is one of the means that Congress uses to fund deficit budgets. We borrow from ourselves, but as those dates get closer, the IOUs turn out to be real.

Originally posted by normbenign
The so called SS trust fund, is one of the means that Congress uses to fund deficit budgets. We borrow from ourselves, but as those dates get closer, the IOUs turn out to be real.

The money was not borrowed, it was stolen with no attempt ever made to pay it back. The IOU's just keeps track of the stolen money. It will never be paid back and there is no money left to borrow. Why are we nearly 19 trillion dollars in debt if we could just borrow the money from Social Security? Explain that one to me. 😏

Originally posted by RJHinds
The money was not borrowed, it was stolen with no attempt ever made to pay it back. The IOU's just keeps track of the stolen money. It will never be paid back and there is no money left to borrow. Why are we nearly 19 trillion dollars in debt if we could just borrow the money from Social Security? Explain that one to me. 😏

That was my attempt at explanation. The trust fund is an accounting gimmick. The money has been spent, and it will never be repaid, nor will the rest of the nearing $20 trillion.

If you are a SS recipient, as I am, don't count on it past another dozen or so years.

Originally posted by normbenign
SS is already somewhat means tested. Someone who has worked and entire career paying maximum FICA taxes, and someone who has worked and paid the bare minimum don't receive proportional benefits. Not even close. Further means testing would make it more of a welfare system than it already is.

Means testing based on a person's financial capability at retirement would indeed move us further toward a welfare state and have counterproductive financial effects on the SS program.. But means testing according to total lifetime earnings would incentivize people to invest and save more of their income, because someone who earned a LOT but didn't invest and save, would be means-tested to the same low SS payment at his brother who earned a LOT and invested wisely and saved.

This approach is well explained (including its down-side, one being a long time till effects are seen) at

http://www.nationalaffairs.com/publications/detail/means-testing-and-its-limits

In the section titled "A Better Way" one immediate-effect step is discussed: going to a progressive COLA, where the wealthy top third get no COLA, the poorest bottom third get the current COLA and the middle third get half the current COLA. It would produce significant short term savings. Combining this with going to a lifetime-earnings means test would add its longer-term payoff and other positive motivations to work and earn.

Originally posted by JS357
Means testing based on a person's financial capability at retirement would indeed move us further toward a welfare state and have counterproductive financial effects on the SS program.. But means testing according to total lifetime earnings would incentivize people to invest and save more of their income, because someone who earned a LOT but didn't invest and ...[text shortened]... ngs means test would add its longer-term payoff and other positive motivations to work and earn.

I don't like that either because it is not fair. Even those receiving the most from their Social Security should receive some COLA in my opinion. I just believe those at the bottom should get the higher percentage in order to keep them above the poverty level in their retirement years. Or as I said before, everyone get the same lump sum amount and do away with the percentage system for COLAs.