Don’t Trust the Government to Take Care of You

Next year… for only the third time in the last 40 years… the government will not be increasing your Social Security payments. It also won’t raise its payments to disabled veterans and federal retirees.

Worse… All three of these non-raises have come since 2010.

Just take a look at the following chart… Notice a trend?

COLA

So if you’ve retired in the last 10 years… or are considering retiring in the next 10 years… you might be a little ticked off.

All told, this will affect about 65 million Americans… or about one-fifth of the country’s population.

“Where’d mine go?” you might be thinking… especially if you compare your latest grocery receipt or doctor’s bill to one from this time last year. The cost of groceries may be higher. But the checks you receive won’t be.

This is why you cannot – absolutely cannot – trust that the government will take care of you.

By law, the decision whether to raise Social Security benefits, called a cost-of-living adjustment (“COLA”), is set every October… and is based on the September government measure of inflation report, which came out yesterday.

Inflation isn’t showing up in the average numbers – mostly due to the drop in gasoline prices, which is down about 30% from last year.

But other costs are going up since last September… Medical care has climbed 2.4%, housing costs are 3.2% higher, and food prices are up 1.6%.

If you take a look at your budget… you might find that these are the three areas in which you spend the most money.

A study this year by the Senior Citizens League found that Social Security benefits have lost about 22% of their buying power since 2000, despite several COLA benefit increases.

According to the study, from January 2000 to January 2015…

  • Heating oil is up 159%,
  • Medicare Part B premiums are up 131%,
  • A pound of ground chuck is up 130%,
  • The cost of a landline phone is up 52%,
  • And even the price of a stamp is up 48%.

The price for your home insurance and real estate taxes have also more than doubled, at 161% and 127%, respectively.

So the buying power of Social Security benefits has gone down…

But consider that nearly one in three Social Security recipients counts on government checks for 90% or more of their income, according to the Social Security Association. For these folks, the decrease in purchasing power is difficult… But any cut in real terms would be a disaster.

Here at Retirement Millionaire Daily, we’re about helping you live better on less than you imagined possible… and getting more of what you deserve.

If you’re a paid-up Retirement Millionaire subscriber, you need to read our “5 Simple Strategies for Maximizing Your Social Security Income” report on our website today. (It’s complimentary with your subscription. If you’re not already a member, you can learn how to join here.)

As I’ve said before to my Retirement Millionaire subscribers, Social Security is an important “annuity-like” factor of your retirement. And I don’t think it’s “going broke.” Barring an utter collapse of the U.S. government, Social Security should still be around when you’re ready to collect.

But it shouldn’t be the only thing you’re relying on. Ultimately, it’s up to you to ensure your comfortable retirement.

So if you’re on a fixed income – like a pension or Social Security – it is imperative to own shares of strong businesses that can keep up with future price changes and pass some of that growth back to investors.

I’ll have more on this in future issues of Retirement Millionaire Daily.

And if you’re a subscriber to any of my advisory services, you already have a prime list of some of the best businesses in America and around the world in our model portfolio recommendations.

Were you surprised by the lack of an increase in Social Security benefits? Have you seen inflation in your everyday purchases? Let me know by writing me, here.