MoneyWise Staff Writer – While Obama prepares to retire on a comfortable $205,700 a year pension, American seniors are left starving for more retirement income.
As if zero interest rates, low bond yields and an anemic stock market aren’t enough…
Don’t expect too much from your Social Security checks either.
As you know, Social Security recipients receive an annual increase in their benefits. This increase is tied to the consumer price index and is meant to support retirees’ rising living costs.
It’s called a “cost-of-living-adjustment,” or COLA.
In the last 40 years, benefits were raised every single year except for 2009, 2010 and 2015.
In 2014, Social Security checks went up 1.7%. The year before, it was 1.5%.
On average, Social Security benefits increased by 3.8% every year.
In 1980, retirees even saw them go up 14.3%!
But in 2017, you will see your checks only go up a measly 0.3%.
At an average benefit payout of $1,238 a month, that’s less than 4 bucks extra!
In other words, one Starbucks coffee with cream could eat up your entire monthly Social Security increase.
How does the Social Security Administration get away with that?
Supposedly, low inflation is to blame for that. And it’s true that gas prices have gone down last year, and some food items have become cheaper.
But if you’re 60 and older, by far your biggest worry is the cost of medical treatment.
And according to a recent analysis by Pricewaterhouse Coopers, health care costs will rise another 6.5% in 2017, the same rate as this year.
With a tiny increase of 0.3% in our Social Security checks, retirees are expected to stem the rising costs for healthcare out of their own pockets.
After paying into the Social Security fund their entire lives’, retirees are once again left on their own.
But there are alternatives retirees can use to cover their rising expenses.
One of them is a special type of “retirement” account that bankers and many companies use to compound their profits.
This account is not connected to a public organization, so it’s safe from governments who decide on a whim how much money you get from your own retirement account.
And as you’ve seen, the government isn’t likely to increase your Social Security benefits significantly in the next few years.
But this account can give you the safety of your Social Security income, only with much higher interest.