Early Retirement Blog

Retired seniors collecting Social Security will not be receiving a COLA increase, or Cost of Living Adjustment, in their 2010 and 2011 monthly Social Security checks.

In fact, millions of  Seniors who are enrolled in the Medicare prescription drug program, and who have their premiums deducted from their Social Security checks, will for the first time since 1975 see their Social Security checks decrease, according to the Social Security trustees.

This comes as very unwelcome news to the 50 million retirees that have suffered from the economic collapse.   Who have watched the values of their houses and stock portfolios plummet this past year, who are earning near zero percent returns on their bonds and CD’s, and who depend on Social Security to supplement their retirement income.

Retirees may be wondering how it is possible that, while they may be witnessing the price of food, fuel, health care, etc., increasing, can Social Security not increase the Cost of Living Adjustment?   It is because Social Security compares the costs of a basket of items from the third quarter of the previous year, to the third quarter of the current year.

And, over the past year, the U.S. economy has been experiencing massive deflation.   The price of oil went from $140 per barrel to $35 per barrel.  Housing values have crashed and therefore rents have decreased.   The cost of health care continues to increase, but it’s increase, is not enough to offset the drop in the overall price deflation.   In the past few months, due mainly to the increase in the price of oil, prices have begun to rise again, but they are still well below their peak.

What can seniors do in response to this latest bit of bad economic news? Two things.   First,   use our free  retirement calculator, to make sure that you are not over spending and putting your retirement in danger.

Second, all seniors should contact their representatives and demand that the public option be included in any Health Care Reform proposal.   The public option is the only way rising health care costs, for seniors and everyone, can be kept under control.   The health insurance industry is doing a very good job, of using misinformation to convince seniors that health care reform is not in their best interest, using confused and concerned seniors to protect health insurance profits, to protect their ability to obscenely increase prices for health care and medications.   Don’t be fooled.