Social Security: Are Seniors Getting Shafted?
The 2009 Social Security and Medicare Trustees Report has some disturbing, but not entirely unexpected news about how the recession is affecting Social Security. But if you're currently receiving Social Security benefits, you are in for another surprise. The Social Security and Medicare Trustees have predicted that Social Security beneficiaries won't receive an annual cost of living adjustment in either 2010 or 2011.
This failure to come through with an annual increase in benefits is the first time in more than 30 years for the Social Security Administration. It's interesting to note that Social Security recipients are facing two years of no COLA increase after 2009's increase, which was the largest annual cost-of-living adjustment for since 1982. If no action is taken to improve the fiscal health of Social Security, the payroll taxes paid by U.S. workers are expected to cover the cost of Social Security benefits until 2016.
The U.S. Government relies on COLAs to safe guard the purchasing power of Social Security checks from inflation. To calculate the size of Social Security COLAs, one must gauge inflation. When it rises by one tenth of a percent or more from one year to the next, Social Security pays a COLA to reflect this increase. But when it rises by less than 0.05 percent, as it did last year thanks to plunging energy costs, no COLA is paid.
After that, the government will have no choice but to take money from the Social Security trust fund on an annual basis to make up the difference between the payroll taxes received and the money given out in benefits.
According to predictions, the government would be able to maintain that until 2037 when the trust fund would finally be empty and payroll taxes would cover no more than 78 percent of the promised benefits.
If you retire before 2037, you are almost guaranteed to receive most of the benefits you were promised and have been anticipating, but most likely not all.
Social Security benefits are the main source of income for more than half of older Americans, many of whom now reside in assisted living homes. This is a number that is almost certain to grow greatly as more baby boomers begin retiring.
About the Author
Assisted living marketing services are provided by 800seniors.com a leading referral system in the assisted living industry. For more information, call 1-800-768-8221. Sky Palma is a freelance staff writer
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