COLA fading?

[mickeyd]

Part of an email that I received from MOAA says this about COLA possibilities~Inflation dropped 0.1% in June. Unless that trend is reversed significantly in the next three months, prospects are dimming for any retiree COLA in 2011.

Quote:

The Bureau of Labor Statistics announced the June CPI-W of 213.8 which is a decrease of 0.1% from the May CPI-W of 214.1. The June CPI-W is now down .8% from the 2008 COLA base of 215.5. The 2008 COLA base will be used to calculate the 2010 COLA since there was no 2009 COLA as a result of negative inflation from the third quarter of 2008 to the third quarter of 2009. ----------------------------------------------

[ziggy29]

The CPI is becoming more and more of a joke. At least it is for people who are frugal and don't buy a lot of big ticket discretionary stuff. There's no way I'm going to believe that the price of the essentials aren't rising.

[W2R]

I'm pretty sure (from what I have read in various articles) that federal employees probably won't receive a COLA raise in 2011, and might not in 2012 either.

But, luckily a 2011 COLA isn't going to affect me either way. I think I wouldn't get a COLA (well, a FERS "diet COLA") until 2012 since I just turned 62 this year. Maybe we will get one in 2012.

[rescueme]

OTOH, it's a positive outcome for those on a non-COLA pension (the few on pension, that are not government folks) or those like me, who took a chance on a non-COLA SPIA.

In my case, it works out well since I decided on a non-COLA to keep my payments higher and act as an "income gap" from the time I retired till I "trade it in" to draw SS (COLA adjusted) at age 70.

I agree that there is inflation, regardless of how they "cook the numbers", however it is not as painful as it was back in the 70's.

I look at it as the cup half-full, from my little spot of the world ...

[ziggy29]

Quote:

Originally Posted by rescueme I agree that there is inflation, regardless of how they "cook the numbers", however it is not as painful as it was back in the 70's.

Yeah, there's no question that inflation isn't currently raging, but just about all the deflation cooked into the CPI (apart from chicanery like substitution and hedonistic adjustments) is in the big ticket discretionary items, not in the basic necessities. LBYM types who buy almost nothing but the necessities are almost certainly experiencing personal inflation considerably higher than the CPI.

On the other hand, if you have a reliable and secure income stream it's a great time to be a buyer of discretionary "stuff". It's a strange world we're living in now with a strongly inflationary monetary policy and strongly deflationary demand.

[Pete]

The Tax Foundation keeps track of how much of the 8 hour work day goes to what;

http://www.taxfoundation.org/files/sr160.pdf

My "personal CPI" has gone down in every catagory except taxes. I think it would be the case for most retirees. Since it's mostly retirees who worry about COLA raises in Social Security, looks like a winner.

Do they count taxes when figuring COLA? If not they should. It's gonna be the single biggest obstacle in our future, perhaps along with healthcare.