A 5.9% COLA has consequences

Seniors cheer the higher benefits – but it’s not enough.

Advocate groups say the COLA doesn’t reflect retiree spending and want a new inflation measure – CPI-E.

All the while the Trustees have projected lower inflation rates and one group estimates a 5.9% COLA can accelerate the trust fund exhaustion by a year.

2021 Trustees Report

6 comments

  1. President Biden and the federal reserve still denies there is long term inflation. US Savings Bond “I” bond rate came out for the next 6 months at 7.12%.

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  2. True, however, the treasury must borrow the amount it redeems to fund current payments. Either borrow or pay out of current income tax receipts. Since the current US annual budget runs way in the red, I say borrowed.

    The money paid in earlier years to build the trust fund was spent over the years on other items and the Treasury bonds were issued as an accounting for the “debt” owed to the SS program.

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  3. Well, advocates exist to get more benefits for their particular groups. So no surprise there.

    The depletion of the trust fund a year early means nothing in the grand scheme since it is all borrowed money anyway. Social Security is basically secure only to the extent of the annual payments from current workers.

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    1. It’s not borrowed money. It’s the taxes paid by past workers that have been invested in Treasury bonds paying the trust $79 billion in interest each year. And this year or next the Trust must redeem some of those bonds to pay benefits.

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      1. The SS Trust Fund is the money SSA loaned to the government in years of a surplus in SS tax receipts. When the bonds are cashed to pay benefits in the coming years, the government will have to borrow that money. And we will pay interest on another 2.9 trillion dollars forever, starting around 2033. That is 58 billion each and every year at 2%, CRAZY way to fund our government spending programs.

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