Social Security Cost of Living Increases Under a Chained CPI

Since 1975, Social Security beneficiaries have received automatic annual COLA's or cost-of-living adjustments.  These were set up so that our benefits would increase every year in which there was inflation.  Over the decades, COLA's have protected millions of retirees from losing their ability to survive on their benefits plus, ideally, their retirement savings and/or a pension.

Historically, the cost-of-living adjustments have amounted to as much as 14.3% in 1980 down to 0% in both 2010 and 2011.  In 2013, the COLA was only 1.7%.  The amount of the increase each year has traditionally been based on the Consumer Price Index (CPI-W) for the year preceding the increase.  For the average Social Security beneficiary who was receiving $1,240 in 2012, the 1.7% increase raised the amount they were receiving to $1,261 a month. 

The Consumer Price Index that has been used to calculate the size of the of COLA's is based on the prices paid by urban consumers for a specific list of goods and services.  The inflation calculation that has been used in the past is the CPI-W, which is based on goods and services used by urban American workers.  This has been criticized because some advocates for the elderly believe that the CPI-E (or Consumer Price Index for the Elderly) should be used instead.  It relies more heavily on expenses commonly incurred by senior citizens, such as rising health care costs.  However, CPI-W has been used instead, although it is a less generous indicator of inflation.

Now, however, Congress is seriously considering replacing the CPI-W with the even less generous chained CPI.  According to many advocates for seniors, including AARP, this will effectively be the same as a net benefit cut for retirees, as well as for disabled Veterans, who would also see their COLA adjustments change.

President Nixon signed the Social Security COLA law into effect in 1972.  Since then, cost of living increases have been legally mandated whenever the CPI indicates that there has been measurable inflation.  During the past four years, however, the TOTAL cost-of-living increases have only amounted to less than 6%.  Despite this, there is a good chance that future COLA's will be even smaller, should the chained CPI replace the CPI-W as a measure of calculating inflation.

What is the difference between the traditional CPI-W and the chained CPI?  The CPI-W is a formula that measures changes in the cost of items that workers typically purchase.  A chained CPI assumes that, when prices for an item go up, people will substitute less expensive items.  For example, if beef prices rise people will eat more chicken; therefore, they will not actually be spending more money.  This means that the size of the Social Security cost-of-living adjustments do not need to be as large.

At first the difference in the cost-of-living adjustments may not seem to be very much, perhaps just $44 less annually during the first year.  However, the amount of lost revenue continues to compound annually.  For example, AARP estimates that a typical Social Security recipient who is receiving $20,000 a year when he retires at age 65, by age 70 will have lost $662 in cumulative benefits under a chained CPI than they would have earned under a CPI-W.  By age 80, they will have received $5,248 less; and by age 90 they will have lost $14,076 in cumulative payments.

Remember, the CPI-W is already less generous than the CPI-E which many advocates for seniors believe we should be using instead.  To go from a CPI-W to a chained CPI could be devastating for the majority of seniors who will continue to fall behind inflation during the portion of their lives when they may be facing high expenses for medical and personal care.  By the time seniors have been retired 15 or 20 years, very few of them are able to work and recoup the amount of income they are losing to inflation. 

If we Baby Boomers allow this change in the way our future cost-of-living increases are calculated, we could face a very difficult time during our retirement years.  ARRP suggests that everyone who is concerned about this issue write to the President, your Senators and your U.S. Representatives before this change becomes law.

If you wish to see how these changes could affect you personally, use the AARP calculator at http://www.aarp.org/whatyoulose

Resources:

http://www.ssa.gov/cola/automatic-cola.htm
http://www.ssa.gov/pressoffice/pr/2013cola-pr.html
http://www.ssa.gov/pressoffice/factsheets/colafacts2013.htm
http://www.bls.gov/cpi/
http://news.firedoglake.com/2012/10/16/social-security-cola-increase-for-2013-1-7/
http://www.aarp.org/politics-society/advocacy/info-02-2013/the-chained-consumer-price-index-explained.html

If you are interested in reading more about retirement planning, check out the index articles listed below.  Each one contains some general information as well as links to other articles on that topic.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

You are reading from the blog:  http://baby-boomer-retirement.blogspot.com

Photo of U.S. Capital Building courtesy of www.morguefile.com

Arthritis and Foods You Should be Eating or Avoiding

One illness that most of us dread as we get older is arthritis.  There is no cure for it and about half of us will experience at least a bit of discomfort from this degenerative disease as we grow older. Some of us will suffer extreme pain and loss of mobility as a result of this diagnosis.  For Baby Boomers, this means that our Golden Years may not be as pleasant as we once hoped.

The U.S. Center for Disease Control keeps records of the prevalence of arthritis in the United States.  Here are some of the facts I found on their website:

Almost one out of two people will have symptoms of osteoarthritis in their knees by the time they are 85.  The rate is even higher if they are obese.

One in four people will have pain from arthritis in their hips during their lifetime.

About 50 million American adults have been informed by their physicians that they suffer from osteoarthritis, gout, rheumatoid arthritis, fibromyalgia or lupus ... which are all related autoimmune disorders.  This number will rise to about 67 million by the year 2030.

By the time we reach age 65, about half of all adults report that they have been diagnosed with arthritis.

Even our children and grandchildren are not immune.  About 1 in 250 children have been diagnosed with some type of arthritis, including rheumatoid arthritis.  (I understand how frightening this diagnosis is.  One of my granddaughters was diagnosed with it when she was only five years old.  While she currently gets by quite well, from time to time she does have a painful flare-up of her condition.)

Common Arthritis Treatments


Once we have begun to develop the pain and stiffness associated with arthritis, the most common treatments are over-the-counter or prescription pain relievers, and many seniors consume large quantities of these medications in order to alleviate their discomfort. Unfortunately, this can contribute to other health problems.  However, what if you could reduce the amount of painkillers you take by adding certain foods to your diet, and eliminating your consumption of others?  It would certainly be worth a try.

Below are three lists of foods which affect arthritis in our bodies, according to the AARP website.

Arthritis and the Best Foods to Eat

Fatty Fish like sardines, herring, tuna and salmon
Other Omega-3 foods such as flax seeds, soy beans, walnuts, pumpkin seeds and canola oil
Vitamin D from the sun or low-fat milk
Extra-virgin olive oil
Sweet peppers, citrus fruits and other foods containing Vitamin C
Brazil nuts
Onions and leeks
Tart cherries - fresh, frozen, canned or dried
Green tea - but make sure you drink the caffeinated, not the decaffeinated, kind


Foods to Avoid If You Have Gout or Gouty Arthritis

Shellfish - clams, oysters, mussels
Red meat
High-fat dairy foods
Beer
Anchovies, Herring, Mackerel
Organ meats like liver, brain, kidney and sweetbreads

(I found the mention of herring interesting, because it is considered good for other types of arthritis, but not gout.  It is important to know the type of arthritis that is causing your pain.)

Foods to Avoid for All Types of Arthritis

Sugar
Sunflower, safflower, corn and soybean oils
(Both are common in many commercial baked goods and snacks.  Anyone who suffers from arthritis should avoid baked goods, especially those that are ready-made in the grocery store.)


Resources:

If you are interested in learning more of the specifics about why these foods are good or bad for people suffering from arthritis, you may want to go directly to the full article on the AARP website, shown below:


http://www.lifescript.com/health/centers/rheumatoid_arthritis/tips/fight_arthritis_10_foods_that_help_and_hurt.aspx?utm_source=outbrain&utm_medium=cpc&utm_campaign=arthritis_rheumatoid

CDC Statistics on arthritis:

http://www.cdc.gov/arthritis/data_statistics/arthritis_related_stats.htm

If you are interested in reading more about medical issues as you age or about planning your retirement, check out the index articles listed below.  Each one contains general information as well as links to additional articles on that topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical topics for Baby Boomers

Money and Financial Planning for Retirement

You are reading from the blog:  http://baby-boomer-retirement.blogspot.com

Photo of tart cherries courtesy of www.morguefile.com

Ghosting or Identity Theft of the Deceased

Every year, 2.5 million dead Americans have their identities stolen, according to a report in the March, 2013 AARP Bulletin.  That works out to about 2,200 deceased individuals every day.  This statistic absolutely floored me, because I had no idea the practice was so common.  In fact, until I read the article, this was an issue that I had never thought about at all.  Admittedly, every once in a while I have heard about a criminal who assumed the identity of someone who was dead.  However, to be honest, usually the incidents I heard about involved characters on television crime dramas. This was not something I thought should concern me or people I might know in my own neighborhood!

Identity theft of deceased individuals is called "ghosting" and it has become incredibly widespread.

How Ghosting Happens

How do criminals get the information they need from a deceased person in order to steal their identity?  For the most part, we give it to them. 

First, the thieves go through obituaries in the newspaper to find the name, address and birthdates of the people they plan to target.

Next, they use websites on the Internet to purchase that person's Social Security number.  With just that information, they have everything they need in order to steal an identity.

What Do the Criminals Do With the Stolen Identity?

Thieves can commit a number of crimes once they have stolen an identity, whether the victim is alive or not:

First, they may open credit card accounts and make purchases in the name of the deceased person.  Often, this can go on for months, because the deceased and their heirs are not receiving the credit card statements, which may be sent to a P.O. Box or dummy address.  In addition, the deceased are not reviewing their credit reports.  Their heirs are probably not reviewing the credit reports, either.

Another type of crime occurs when the identity thieves go so far as to file fraudulent tax returns and collect refunds.  In fact, thieves actually collected $5.2 billion in 2011 alone by using ghosting techniques with the IRS!

How to Prevent Ghosting

With a few simple steps, family members can reduce the likelihood that the identities of their deceased loved ones will be stolen:

When you write an obituary, do not include the mother's maiden name, the birth date of the deceased, or any other detailed personal information that could help identity thieves.  In addition, do not include the home address of the deceased or any other family members.  Not only will you make it harder for identity thieves, but you will also make it less likely that your home will be burglarized during the funeral. (Of course, that's an additional problem that can come from releasing too much information in an obituary.)

Make sure you order plenty of copies of the death certificate.  You will need to mail them to each of the credit-reporting bureaus as well as insurance companies, banks, brokerage firms, credit card companies and the mortgage company.  If any of these are joint accounts, have the name of the deceased removed from the accounts as soon as possible.  If they are individual accounts in the name of the deceased only, have the accounts closed.  One of my friends, who has dealt with the death of several relatives, recommends that you get at least 20 certified copies of the death certificate because there are so many places where it needs to be sent.  She believes it is important to request more than you think you will need, because you do not want to have to through the delay of requesting additional certified death certificates.

Contact the Social Security Administration right away.  You can call them at (800) 772-1213 and report the death of your family member. 

Contact the DMV in your state and cancel the drivers license of the deceased.

Even after doing all this, you should wait a couple of months and then check the credit report of your loved one at annualcreditreport.com to make sure there has not been any recent activity.  Do it again a few months later.  If you see anything suspicious, report it immediately.

Being careful to prevent ghosting can also prevent a lot of headaches for the heirs and the trustees of the estate.  No one wants to deal with proving that purchases made or tax returns that were filed were done by criminals and not by the heirs.

If you are interested in learning more about issues related to aging and retirement, check out the index articles listed below.  Each one contains a few comments as well as links to more articles on that topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

You are reading from the blog:  http://baby-boomer-retirement.blogspot.com

Photo of cemetery courtesy of www.morguefile.com

Fascinating Statistics about Baby Boomers

What does it mean to be a Baby Boomer?  As we have all been told repeatedly over the years, we are the generation that was born after the end of World War II, in the years between 1946 and 1964.  Once the war was over, the soldiers returned home, got married and started families.  These young soldiers and their wives, who still remembered the Great Depression that preceded the war, were proud to buy their first homes in the suburbs where they hoped to provide a better life for their children than the one they had known before the war.  These children became known as Baby Boomers.

The very existence of the Baby Boomer generation has had a tremendous impact on American society, beginning with the need to construct new schools when we were children and, later, started families of our own.  Now that we are reaching age 65 at the rate of 10,000 a DAY, we will also be having a tremendous effect on both America's medical system and retirement system.

Although it is easy to make generalities about any group of people, the truth is that you cannot lump us all together.  We are a complicated bunch of people who embrace every political, economic, religious and philosophical aspect of American life.  When I do research for this blog, I am constantly running across interesting facts about our generation and thought I would share some of the more fascinating statistics with my readers.  If you want more details, I have also included my sources at the bottom of this blog post.

Baby Boomer Statistics Affecting Retirement

Every 10 seconds one of us turns 65 (this amounts to between 3 and 4 million Boomers a year).  This means that we are the force behind the rapid expansion in the number of over-55 communities, senior apartments and skilled nursing facilities.

Not only are we currently reaching the age of 65 at the rate of about 10,000 a day, but we will continue reaching retirement age at this rate for the next 20 years!  This will result in more than double the number of senior citizens in our country by 2050.

Nearly half of all American workers (which includes our adult children) have less than $10,000 in retirement savings.   However, even when you only consider older workers, one-fourth of workers in the 46 to 64 year old age group have NO retirement savings or personal savings.

Baby Boomers tend to carry more credit card debt than younger adults in our population.  Approximately 56 percent of current retirees still had outstanding debts when they retired.

Seventy percent of American workers plan to work after retirement, and forty percent of Baby Boomers say they expect to work "until they drop."  (Check the medical statistics below, however; many of us will not be able to keep working for the rest of our lives, even if we want to.)

In 1945, there were 42 workers for every person on Social Security.  Today there are only about 2.5 workers per Social Security beneficiary, and this number is expected to drop even more in coming years.

Without savings, the financial situation for many Baby Boomer retirees will be difficult.  The average retiree only received about $1,230 a month in Social Security benefits in 2012.

Baby Boomer Statistics Affecting the Medical System

By the time we reach 65, about two out of three of us have at least one chronic disease.

On average, we have seen seven different doctors in order to get our medical conditions treated, and this number is expected to grow to fifteen different doctors as we age.  This can create confusion due to conflicting instructions and lack of communication between the various physicians who treat us.

Boomers buy 61 percent of the over-the-counter medications and 77 percent of all prescription drugs that are sold in the U.S.

Boomers and the Economy

Our generation is the largest buying group in the U.S., and we account for 40 percent of our nation's consumer demand.

We control 70 percent of the total net worth of all households in the U.S.  This amounts to about $7 trillion.

We have about 80 percent of all the money currently deposited in savings and loan associations.

We like to travel.  Boomers account for 80 percent of all leisure travel.

On the other hand, Americans over the age of 55 now account for 20 percent of bankruptcies in America.  Over 60 percent of these bankruptcies were caused by our medical bills.  In 75 percent of the bankruptcies that were caused by medical bills, the people actually had health insurance!  This means that having health insurance is not enough to protect our financial situation if we do not also have adequate retirement savings.

Other Interesting Statistics

Boomers watch more TV than any other age group.  (Perhaps we should stop criticizing our teenage grandkids for watching too much TV!)

We also read more newspaper than any other age group.  (This did not surprise me, since most of my adult children and grandchildren barely read the newspaper. They tend to get all or most of their news online.)

We use technology in our jobs, we are internet-savvy, and we enjoy shopping online.  (While many of our parents may still resist using some forms of technology, our generation embraces it.)

We are involved in our communities, with about 29.3% of us regularly volunteering.

About 55 percent of boomers plan to move to a new location when they retire.  About half of those will move to an area that is more than a three hour drive from where they live now.  They will be looking for homes that are smaller and require less maintenance.  This has helped to fuel the housing boom in senior communities and housing.

Despite some of the grim financial and medical statistics listed above, about 34 percent of Boomers love being empty nesters and say that their time alone makes them feel closer to their spouses.  This may also be related to the fact that Boomer women can expect to be sexually active until age 66 or older (according to Time Magazine, April 26, 2010).

The bottom line appears to be that, while Boomers can expect to have to deal with serious financial and medical issues in the future, there are still many reasons for them to look forward to enjoying the coming  years.

More retirement information:

If you are interested in more information about retirement, check out the index articles listed below.  Each ones contains an introduction and links to more articles on that topic.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

Resources:

http://www.babyboomer-magazine.com/news/165/ARTICLE/1514/2012-02-17.html

http://www.babyboomer-magazine.com/news/165/ARTICLE/1217/2013-04-03.html

http://www.nationalservice.gov/programs/senior-corps

http://theeconomiccollapseblog.com/archives/do-you-want-to-scare-a-baby-boomer

http://www.stageoflife.com/StageRetirement/OtherResources/Statistics_about_Baby_Boomers_and_Retirement.aspx

You are reading from the blog:  http://baby-boomer-retirement.blogspot.com

Photo of couple is courtesy of www.morguefile.com