Curmudgeon Alley

”I heard a cynical comment to the recent announcement of a 5.9% cost of living adjustment to Social Security benefits, “Oh that is just Biden attempting to buy votes!

Just a few bits of data for grinding the old mental gears on:

1. The current US monthly inflation rate is running north of 5%. If that continues the COLA will be mostly wiped out by inflationary pressures. The consumer price index is in the same ballpark. I’ve not researched it, but I do not believe past COLAs have kept up with inflation.
2. A recent study found that 40% of Americans are living solely on Social Security. Forbes, among others, disputes this study as being inaccurate and biased (for my part, I always assume Forbes has a conservative agenda to push).  Whatever the real number is, there are a fair number of our fellow citizens solely reliant on SS benefits for their daily bread.
3. Pension — Less than one-third (31%) of Americans are retiring with a defined benefit pension plan today. For those who do retire with a pension plan, the median annual pension benefit is $9,262 for a private pension, $22,172 for a federal government pension, and $24,592 for a railroad pension.
4. The average 401(k) balance for a 65 year old is $216, 720, but the median amount is $64,548. By definition, the implication is that 50% of this age group has less than $64,548 in these types of plans. At 65 you have a good chance of living another 15 or 20 years…not a lot of savings for that time frame.
5. They talk about the 3 pillars of retirement: Social Security, a defined benefit plan (pension) and savings, 401(k) etc. Most of us are sitting on 1 or 2 legged stools.
6. The average Social Security benefit was $1,543 per month in January 2021. The maximum possible Social Security benefit for someone who retires at full retirement age is $3,148 in 2021. The average amount works out to $18,516 a year.  A 5.9 % bump works out to $91 a month.  I am reasonably sure the commenter would think he was living in poverty at twice or even thrice the average annual amount.
7. Purely anecdotal, but when I was in college I did a survey for the Department of Transportation about the need for public transportation in under-served areas. The area I surveyed happened to have a high percentage of retirees. One of the questions on the survey was about income.  Of course, people will almost always lie about two things, money and sex  However, many of these folks were very open about giving me their income information (I did not ask about their sex lives… that would not have been professional).   It was very scary what some folks were trying to live on, many of them solely dependent on a SS check.  I vowed then to work towards having a retirement not solely dependent on SS.

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