Should Senior Citizens Become Cry Babies Over Social Security Freeze?

by Joe Plemon on October 18, 2010

Have you read the reactions of Seniors on the news that Social Security increases won’t happen next year?

Here is a sampling:

From Huffington Post:

  • I think it’s disgusting,” said Paul McNeil, 69, a retired state worker from Warwick, R.I., who said his food and utility costs have gone up, but his income has not. He lamented decisions by lawmakers that he said do not favor seniors. “They’ve got this idea that they’ve got to save money and basically they want to take it out of the people that will give them the least resistance,” he said.

From Reading Eagle:

  • No COLA (cost of living adjustments) again next year will certainly be problematic for a lot of seniors,” said Andrea Kurtz, director of administration for the Berks County Office of Aging. “It will be especially hard on those who don’t have pensions or retirement monies, and whose only source of income is Social Security.”

From WAOW:

  • So many people you see shopping the stores these days are looking for bargains and it’s sad that they are going to have to step back because all prices are going up, and their income is going down,” says social security recipient Clifford Vanderwall.

In fairness, not all seniors are cry babies.

Huffington Post also quoted Stella Wehrly, an 86-year-old retired secretary.

  • I’m kind of glad in a way,” Wehrly said of the freeze. “One thing depends on the other and when people aren’t working there’s not enough people feeding into the Social Security system.” Wehrly and her husband, Hank, said curtailing government spending is necessary to maintain the Social Security system.

I agree with the Wehrlys.

The system simply can’t afford being squeezed when there is no funding mechanism to pay for the squeezing. Federal law requires the Social Security Administration to base annual payment increases on the Consumer Price Index for Urban Wage Earners and Clerical Workers, which measures inflation. Simply put, if inflation occurs this year, all Social Security recipients get raises the following year. If there is no inflation, there is no raise. I didn’t hear any complaints when the Social Security Administration announced the largest raise in 27 years (5.8%) in 2009, even though that raise was skewed upward by high energy prices in the 3rd quarter of 2008; prices which fell dramatically in January of 2009. These COLAs can cut both ways.

The point is that Social Security is an extremely fragile system, on target, according to their own literature, to be paying more out in benefits than the amount collected in taxes by 2016 and, without changes, be out of money in 2037.

Yes, going without raises is tough, especially for those whose retirement is primarily dependent on Social Security income. I am not unsympathetic to retirees whose needs increase while their revenues remain stagnant. But I also feel for our younger generations who are funding the system with little hope of ever drawing from it. A discretionary increase in 2011 would further imperil those chances. I believe that no COLA in 2011 is a harbinger of even tougher future decisions if Social Security is going to be rescued. Things could easily get worse before getting better for recipients.

By the way, when I speak of Social Security recipients, I speak not of “they" but of “we".

I draw a Social Security pension.

What are your thoughts? Do Seniors have a legitimate gripe? Should Congress go ahead and give raises even though there has been no inflation?

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