A growing collection of facts, thoughts and events from a 79-year-old man and his family, friends, and the characters that he has met along the way . . .

WHAT’S WRONG WITH COLA, The annual Social Security Cost-of-Living Adjustment that we Retirees Desperately Need

A Monthly check to You

A Monthly Check to You photo was taken from an article that appeared in  The Peoples Voice.org:  http://www.thepeoplesvoice.org/TPV3/Voices.php/2010/10/19/solution-for-great-recession-double-soc-

While the purpose of COLA, the cost-of-living adjustment, according to the Social Security administration, is to ensure that the purchasing power of Social Security and Supplemental Security Income benefits is not eroded by inflation BUT the formula does not work!
The formula is based on whether or not there is an increase in the CPI-W (the Bureau of Labor Statistics’ConsumerPrice Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the 3rd quarter of the next year. However, there will never be another increase in the COLA as long as the cost of living at the end of the 3rd quarter of the current year does not exceed the highest cost of living on record since the formula was created – or, in our case, the cost of living at the end of the 3rd quarter of 2008!!!Unfortunately, the cost of living during the 3rd quarter of 2008 soared because the price of crude oil rose from around $35.00 USD per barrel to over $145.00 per barrel . Although the barrel price of crude oil dropped below $34.00 per barrel on December 23, 2008  http://en.wikipedia.org/wiki/Price_of_petroleum, that was too late to affect the Cost-of-Living adjustment;  the damage was done.While the price of crude oil today (January 26, 2011) is less than $80.00 per barrel, we cannot eat it. On the other hand the food that we do eat is more expensive than ever before, and food prices continue to rise. In fact, experts indicate that food prices during the next two or three years will continue to rise to all-time highs.

December 2010 Prices (Not Seasonally Adjusted):

The CPI for all food increased 0.1 percent from November to December 2010, was unchanged October to November 2010, and is now 1.5 percent above the December 2009 level. The food-at-home CPI increased 0.2 percent in December 2010 and is up 1.7 percent from last December, while the food-away-from-home index was up 0.1 percent in December 2010 and is 1.3 percent above last December. The all-items CPI was up 0.2 percent in December and is 1.5 percent above the December 2009 level.

Beef prices decreased 0.6 percent in December but are 6.1 percent above last December, with steak prices up 5.4 percent and ground beef prices up 6.2 percentPork prices decreased 2.1 percent in December but are 11.2 percent above last December’s levelPoultry prices decreased 0.6 percent in December but are 1.3 percent above prices last year at this time, with chicken prices up 1.4 percent and other poultry prices (including turkey) up 0.9 percent. As commodity prices and input costs have risen over the past 6 months, beef and pork prices are now significantly higher than in 2010. Increased inflation for beef and pork products is expected in the first half of 2011, as reflected in ERS’s forecasts—beef prices are now projected to increase 2.5 to 3.5 percent and pork prices 3.5 to 4.5 percent in 2011.

Egg prices increased a mostly seasonal 5.1 percent in December (following a 10.6-percent increase in November), so that egg prices are 6.1 percent above the December 2009 level.

Dairy prices were up 0.4 percent in December and are 3.7 percent above the December 2009 level. Within the dairy category, prices changed as follows in December: milk prices were up 0.5 percent and are 5.1 percent above last December’s prices; cheese prices were down 0.4 percent but are 4.3 percent above last December’s level; ice cream and related product prices were up 2 percent and are 2.6 percent above last December’s level; and butter prices decreased 3.4 percent this month but are 21.9 percent above last December. In 2009, dairy prices were up only 1.1 percent from 2009 (following a 6.4 percent decline from 2008 to 2009). However, higher projected prices for farm milk in 2011 will lead to increases of 4.5 to 5.5 percent for retail dairy products in 2011 based on current ERS forecasts.

Fresh fruit prices increased 3.7 percent in December due to increases in other fresh fruit prices. The fresh fruit index is now up 3.1 percent overall from last year at this time, with apple prices up 3.8 percent, banana prices up 2.9 percent, citrus fruit prices up 9.1 percent, and other fresh fruit prices up 1.3 percent. Fresh fruit prices fell in 5 of the past 11 months, leading to an overall fresh fruit price decline of 0.6 percent in 2010. However, recent price increases imply that fruit prices will return to positive inflation rates in 2011. The fresh vegetable index increased 2.5 percent in December. Since last year at this time, fresh vegetable prices are up 1.2 percent, with potato prices up 5.4 percent, lettuce prices down 7.4 percent, tomato prices down 10.5 percent, and other fresh vegetable prices up 6.9 percent. Processed fruit and vegetable prices increased 1.3 percent in December (the fourth monthly increase in the past 11 months) and are 1 percent below the December 2009 level.

Cereal and bakery product prices were up 0.3 percent from November to December 2010 but are down 0.2 percent from last year at this time, with bread prices up 1.1 percent and breakfast cereal prices down 1.3 percent over the past year. Although cereal and bakery product prices declined 0.8 percent overall in 2010, higher wheat commodity costs should begin to affect cereal and bakery product prices over the next few months, causing prices to rise 2 to 3 percent overall in 2011. Sugar and sweets prices were up 1.3 percent in December and are 2.2 percent above last December. Within the nonalcoholic beverages category, prices changed as follows in December: carbonated drink prices were down 2.8 percent and are down 1.5 percent from December 2009; coffee prices were down 2.6 percent but are up 2.5 percent from last December; and nonfrozen noncarbonated juices and drinks prices were down 0.2 percent in December and are 2.2 percent below the December 2009 level .http://www.ers.usda.gov/briefing/cpifoodandexpenditures/consumerpriceindex.htm

I listened to the president’s State of the Union address last night (January 25, 2011), and I agree with just about everything he said, including the tightening of belts and the reduction of expenditures. However, at the age of 73 I have tightened my belt and reduced my living expenses as much as I can, and I am barely able to exist on my small fixed retirement income. For the second year in a row, I have had to live on a Social Security retirement income that just barely provides me with enough money to pay my bills and buy my food. I even do all of my own cooking; there is nothing leftover for luxuries or entertainment; I even cancelled my account with DirecTV and went back on an old antenna system. My mobile home lot rent used to include the expense of water and sewer; however, I will have to start paying for those utilities out of my own pocket in February (I have already had to put up a $120.00 deposit with the city water company), and I estimate that this new expense will cost me at least an additional $50.00 per month.

The formula our government uses to compute the annual Cost of Living Adjustment (or, the lack thereof) is not fair. My cost of living continues to increase each and every year; in many cases, each and every month. Do any of our representatives have a viable plan in the works that will prevent those of us living on these small fixed incomes from becoming homeless people wandering the streets and digging in the dumpsters for food?

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