The Insidious Creeping Threat to Senior Citizens


By: Richard H. Frank

There are about 50 million Americans, or about 16% of our population receiving Social Security benefits today many of whom have retired in the past ten years. Their dream for independent living during what was to be their “Golden Years” has turned out to be just a dream. More than 64% of those retired persons depend upon Social Security as their only means of income upon which to provide for themselves and their families and some of those could have done better except for the fact that they lost most of their savings in the last stock market downturn.

The majority of these individuals paid into the system their entire working life and are now faced with living within the limits of their fixed income.The last cost-of-living increase seen by these individuals came in their 2009 benefit increase and amounted to 5.8% largely due to sky rocketing oil and food price experienced the prior year.  This resulted in establishing a CPI benchmark cap of 215.495 before any future increases would be granted. Additionally, the calculation for the CPI was changed to exclude the costs of energy and food from the calculation as these were considered too volatile and short-lived to accurately forecast the rate of inflation and thus a true estimate for the “cost-of-living index.”

So just what has occurred between 2005 and 2010 with regard to the impact of food and energy upon the CPI (consumer price index)?  The answer is that the buying power of the fixed income dollar for those people receiving social security has decreased by 52%.  The very items excluded from calculations for cost of living are those that impact the day-to-day existence of our senior citizens.  Consider the following increases between 2005 and 2010:

  • Food increased 65.23%
  • Oil increased 50.16%
  • Coal (energy) increased 168.77%

Energy costs which include power generation and impact food production and the associated distribution costs of all groups are a cancer that is slowly eroding the purchasing power of the dollar.  Yet we have a Government that has no coherent energy policy and does nothing to promote energy independence for America.  Instead, the politicians are content to impose drilling moratoriums and stop exploration for oil in favor of the imposition of onerous penalties such as cap and trade regulations in an effort to stop mythical greenhouse gas emissions.  Eventually, all of their actions and inactions are born by the individual in the form of higher costs for energy and goods produced with that energy.

The real rate of inflation including food and energy costs has exceeded the reported CPI for any year since 2008 and is being borne totally by the fixed income of those receiving social security.  Over the next 20 years the number of those persons eligible to receive benefits will increase by approximately 1% each year due largely to the baby boomers turning 65 years of age.  Unless the continuing trend of higher costs for energy and food is reversed or benefits indexed to include these higher costs, our senior citizen population will be relegated to living below the poverty level owing to unaccountable inflationary influences brought about by energy and food costs. Unless these realities are recognized we shall have created an underclass of aging citizens in America.

Inflation is the insidious creeping threat to every senior citizen in America today and is consuming upward to 10% of their fixed income each year, a situation which is unsustainable.

 

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