With all the talk of Social Security’s deplorable finances, there is another sign that this entitlement program is on the brink of financial exhaustion: minuscule benefit increases.
For the third consecutive year, millions of Social Security recipients, federal retirees and disabled veterans will be receiving historically small increases to their benefits in the New Year. Although it hasn’t been confirmed by the federal government, early figures using the annual cost-of-living adjustment (COLA) suggest two percent, or $20 extra per month.
The government will make the announcement Wednesday when it will also release the latest consumer prices. COLA is based on inflation, which statisticians say is below historical averages, but various products and services are up.
An example of this is meat, eggs and fish, which are up nine percent. Medical costs, meanwhile, have jumped two percent. However, experts are touting the decrease at the gas pump as a sign that inflation is tame, but this is also negatively affecting seniors.
In other words, never listen to the government’s interpretation of inflation. If the government measured true inflation then these benefit increases would be a lot higher than what is being purported. As David Stockman wrote regarding the Federal Reserve’s two percent inflation target rate, it’s a “Keynesian con job.”
“You lose that increase, not only in the short-term, you lose the compounding over time,” said Mary Johnson of The Senior Citizens League in an interview with the Associated Press. “For the middle class, for people that don’t qualify for low-income programs, they are dipping into savings or they are borrowing against their homes.”
What will happen when Social Security is bankrupt and seniors receive absolutely nothing?
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