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Sunday, May 03, 2009

Beyond Here Lies Nothing

Today's entry is not about PERS. Instead, it is about Social Security. This morning's New York Times has a brief, section A, piece about the decision by the Social Security Administration to NOT award a COLA for recipients in 2010. This is the first time in a very long time that the administration has not awarded a COLA. In 2009, the COLA was 5.8%. Just as I become eligible for Social Security (December), I face the possibility of my first year's benefit without the usual COLA. Thankfully, PERS will be giving out its usual 2% in August, but that is offset by the fact that the 2008 CPI-U for the region was 3.3%. So, while costs of everything seem to be going up, or at least not going down, Social Security has decided we don't get a COLA, and the PERS COLA continues to lag considerably behind the actual cost of living increases.

For those also Medicare eligible, you can expect to see some significant increases in costs for the various supplementary plans that will hurt even more with no SS increase to offset any of the pain.

I'm afraid that for all of us "baby boomers", the collision course has begun. Right now, many of us are fortunate to not be feeling the pain of the current economy, but many others are hurting so badly that it is painful to watch. It is beginning to look as though the poet of our age - Bob Dylan - has hit the nail on the head when he says, beyond here lies nothing. He just may be right.


MollyNCharlie said...

Did you also see the Social Security notice that you will be getting the $250 stimulus check in May? In my case, and probably in your, this 'gift' is partially or fully taxable come next tax season.

While I know I am better off than many, this has proved to be a lot less than the "secure" retirement I thought I'd been working for for 30+ years!


mrfearless47 said...

I'm not eligible to receive the $250 check as I am not yet a Social Security recipient (not until December). The social security COLA freeze is actually worse than at first blush as the freeze is certain to last for 2011, and possibly to 2012. Most experts now believe that the next SS COLA won't be until 2013. We can always hope that things will be resolved on the PERS legal front and some benefits currently withheld will be coming our way again. Then again, it might be payback time. Sigh.

thomas said...

Your buddy not only planned no cola this year but is planning on no cola for 2010 and perhaps a 1% to 1.5% cola in 2011 as he drives this country deeper into a level of debt never seen before.

MollyNCharlie said...

Uncle Sam giveth and Uncle Sam taketh away! I'd laugh if I didn't feel so much like crying. To give Social Security and Disability Benefit recipients a one time $250 economic stimulus check while withholding COLAs for 1-3 years seems foolish at best. It also seems short sighted, I mean, how dumb do they think I am? I plan to take my $250 and pre-pay next years taxes.

mrfearless47 said...

If you are referring to the Obama administration as "my buddy", then you are partly correct. I am fully aware that the Social Security COLA freeze is part of the budget for 2010 and 2011 and that this is directly from the administration I helped elect. That said, I'm not angry at Obama for any of this. I'm just disappointed in the timing.

That said, I don't know what people expect. We have R's going all "fiscally responsible" right now after more than 20 years of complete fiscal recklessness. It wasn't Obama who approved ridiculous tax cuts for the affluent in a time of war. It wasn't Obama who drove the economy into the ground, allowed banking deregulation to continue unmonitored, etc. He's just trying to clean up the mess left for the past 8 years and the 12 years prior to Clinton. Sometimes you have to spend money to get the economy moving.

You have a better idea?

Leslie said...

I agree with Peg's posts. Who would have thought after all those years of work? And, no Peg you're not dumb by any means. We have all been very trusting of our politicians. Live and learn.

Does the $250 and the reduced taxes on your PERS retirement put you in a different (higher) tax bracket? Just a ritorical (sp) question. We may all owe more income taxes than the monetary gifts we've received.

We all counted on what had been promised and now the rules have and are changing.

I thought I'd just disappear into retirement and not have to worry, oh my how naive I was.

Yes, I've become a pessimist. You can only hit a dog so many times (Pavlov) before they cower when you approach them.


mrfearless47 said...

One thing is sure here. The lack of a COLA on any social security check for several years will alter the dynamic of taking your benefit at 62. For me it makes far more sense to begin sooner rather than later as the crossover point for taking the benefit moves later and later. In my original calculations, the total dollar amount between taking the benefit at 62 and taking the benefit at 66 (my full eligibility date) converge at about age 78. These changes to the benefit structure make the convergence take place a year later, improving the chances that you won't lose much, or anything, if you take your benefit earlier. The difference for me is $500 per month. While this is a significant amount, it would take me almost 17 years to reach a stable equilibrium with the benefit I'd receive if I waited until age 66. Since I don't know anymore whether Social Security will even be available when I turn 66, sooner to me is always better. And, I plan to invest the money so, hopefully, I'll come out even further ahead especially in the two years with no COLA.

MollyNCharlie said...

Hi Leslie! At this point I have *no* idea where my federal or state taxes will end up for 2009!

I started the year with a $700/month reduction in my PERS check, because I chose to stay in the variable account after I retired (talking about living and learning!). Then the IRS adjusted my federal withholding so I get more now but will have to pay more later. And now Social Security is sending me an extra $250, taxable! I used to work for Oregon Dept of Revenue and in all honesty I'm just guessin' what my tax situation will be when we get to the end of this year.

t said...

I do not understand why I have had to endure 2 years of my pay being deducted $200.00 a month because of the Shrunk decision, when Kantor has ruled that PERS cannot ask retirees to pay back money given them. I was unfortunately one of the first batches of PERS retirees to be notified of my payback responsibility with the new rules. After Kantor's partial ruling no other PERS people were added to the list to pay back money. Now here we are two groups one having money deducted and one not . How is that Fair? WHen is Kantor going to decide if PERS can make us pay the money back? ANd what is the Case now called so I can monitor updates. Also where is the best place to find out updates?