A bigger piece of the pie

This comes under the “what are they thinking” category, at least to my way of thinking.

How many workers do you know who receive a 9-10% raise each year?

Where would the money come from? What about the current underfunding of Social Security as it is? Why do many seniors believe they are entitled to so much more?

Why don’t individuals planning to retire think about dealing with inflation over thirty years of retirement?


  1. This is one area where I failed in my corporate benefits planning role.

    Back in 2005-2006, as we introduced Medicare Part D coverage for retiree medical, it became apparent to me that we had had 20+ consecutive years of modest inflation; for workers and for retirees. For example, I pointed out to my leadership team that the average annual increase in Medicare point of purchase cost sharing had been ~3.5% since 1983. If you look today, from 1983 – 2022, the average annual increase in the:

    Part A deductible was 4.28% ($304 – $1,556)
    Part B deductible was 2.93% ($75 – $233)
    Since 2006, Part D deductible was 4.16%.($250 – $480)
    Part B premium was 7% ($12.20 – $170.10) – most of that came in the last 10 – 12 years.

    Back in 1992, in compliance with Financial Accounting Standard 106, we had made a series of changes to index retiree medical contributions and cost sharing, and we capped the dollar amount of employer financial support – in order to manage the cost. Other organizations simply eliminated retiree medical coverage. So, our retirees were somewhat aware that should inflation take off, it would impact their cost for our employer-provided supplement/complement (and later Medicare Advantage) coverage. There was no pushback as everyone, all around them, saw that:
    – Most employers never offered retiree medical, and
    – Most employers who offered retiree medical were eliminating it, and
    – Those who continued were making similar changes.

    In 2001, for all future hires, we amended the defined benefit pension plan to incorporate a cash balance formula, reducing the pre-retirement inflation protection (when compared to our prior 3 year final average pay and 5 year final average pay formulas). And, we prospectively limited the COLA so that it only applied to the accrued benefit as of the date of the change.

    So, we had shifted the responsibility for most inflation to workers and retirees. I attempted to introduce a communications strategy that would confirm the circumstances under which the employer would consider ad-hoc improvements in pension benefits. My proposal was to communicate that inflation would need to consistently exceed 4% per year from retirement – less any prior post retirement adjustments.

    This was to be mostly about setting worker expectations so that they could plan accordingly – I didn’t expect the employer to actually approve an ad-hoc increase (as we were trying to moderate employer expense):
    – Inflation in the first five years of retirement were to be solely the retiree’s responsibility,
    – After the first five years, the employer would not even consider making an adjustment unless inflation was consistently greater than 4% for the subsequent 5 years (no adjustment during the first 10 years of retirement under any circumstance), and regardless
    – The first 4% (or more) of post-retirement inflation would be the retiree’s responsibility, so plan for it.

    The response was no.

    I’ve been retired from that firm for over 10 years. Today, I’ll go back to a former coworker and suggest he consider updating that prior proposal – now that we have had inflation at 7%.


  2. “Why do many seniors believe they are entitled to so much more?” The “many” did not save enough for retirement. SS is 33.3% of the old retirement stool, not 100%. Unless their plan was to live on less than a third of what they did while working – a poor plan.


  3. At 10% per year, Social Security or even a worker’s salary will double every 7 years. As a retiree, I do not produce for, or add anything new to society. Now I only consume these “entitlements”. I’ll agree to that insane demand when they are agreeable to having their taxes (not mine) raised by 10% every year. People complain when their taxes go up by $100, wait until they double every 7 years.


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