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Sunday, May 05, 2013

Social Security Cost of Living Adjustments - This Safety Net for Beneficiaries Will Protect the Fund from Withering

Americans can't regress to a pre- Social Security era, but Republicans who agree with Newt Gingrich want this vital social safety net to "wither on the vine" - meaning, become extinct.

Perhaps the fastest track backwards, to that dark age before 1937, when many old and disabled people were totally dependent on charity, will happen, if the cost of living adjustments (COLAs) are eliminated or reduced for those receiving this earned poverty prevention benefit.  

In other words, if Americans don't protect the COLA, the benefit will be consumed by inflation and loose value. Therefore, we must protect Social Security and the COLA today, to protect it against regressive Republican "means testing" and other euphemistically labeled cuts.  

Protecting the COLA is essential if Americans are to save the benefit from future wrong minded cuts. 

An informative site about the Social Security Benefit is accessed at this website  (on this link) - the facts provided debunk many "urban legends" about the fund including the myth that Congress doesn't pay into it, which is untrue.  http://www.ssa.gov/history/hfaq.html 

Although the Great Depression was a catalyst for the creation of the Social Security program, the idea of social insurance predated the committee's work and the Depression. As early as the 1880s, Germany had a social safety net program whereby the benefit was supported with worker contributions.

Numerous academic papers have been written about the value of Social Security, but there's little doubt about what ignited its creation.  Regardless of how many people studied Social Security, or how many committees had ideas on the subject, or how many college professors wrote theses on the subject—and there were many of them—the roots of the US Social Security Act were in the Great Depression of 1929. Nothing else would have bumped the American people into a social security system except something so shocking, so terrifying, as that depression (Perkins 1962).

Social Security is an important number in most financial portfolios today because people pay into the fund for many years and live for quite a few more years while receiving the pension.  

But suppose the Social Security benefit today in 2013 were essentially the same amount as the average amount paid per month  in 1940?  Hello? Would YOU fight to save a benefit where your return on investment was a measly $23 (twenty three) dollars a month? Check this website to see how much a retiree received in 1940 and beyond.  http://www.infoplease.com/ipa/A0780010.html

Of course, $23 a month in 1940 was a gift to Depression era and World War II Americans.  But, not today. A $23 benefit in 2013 wouldn't pay one month's electric bill.

On the other hand, the average Social Security monthly benefit paid to a beneficiary in 2011 was $1,187.  Although it's hardly a livable monthly income, it's certainly an amount worth fighting to protect.  

Social Security beneficiaries hardly squirrel their money away.  A large percentage of their monies are immediately spent to support our nation's economy in too many ways to list here.  Licensed financial advisers include their clients' Social Security benefit in retirement portfolio summaries. Only a tiny percentage of Social Security beneficiaries are among those super rich, who are very well off, and, therefore, able to live without receiving this benefit.

It's a well placed cliche to remind politicians that "if it ain't broken don't fix it".  Social Security has worked better than it was ever intended to, because the money earned is reinvested by the beneficiaries who spend it to support our nation's economy.

Let's fight to protect the Social Security cost of living adjustments so that, when our grand children retire, they will receive a benefit amount worth protecting.  

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