Guvmint COLA up 5.8%

[Midpack]

So I don't have a problem with SS in general. But none of these arguments suggest that workers ought to provide a better deal for retirees than the workers are getting themselves.

Summarizes my view better than I did...

 

[Texarkandy]

So I don't have a problem with SS in general. But none of these arguments suggest that workers ought to provide a better deal for retirees than the workers are getting themselves.

Au Contraire - today's workers do get the same deal - a COLA based upon CPI when they start drawing Social Security.

If they change the "deal" then they are changing it for their future selves as well. (for some of us that future is nearer & for some further away)

If you are talking solely about SS - that's akin to asking employees of a company to vote to reduce their future pension benefit, company 401k match, or whatever it is they have for the good of the company as a whole. I think many employees would rather see company management quit overpaying for raw materials, cut unproductive/unnecessary company divisions, consolidate functions, get more efficient, & quit taking management quail hunting and health spa retreats, and other things first.

 

[old woman]

I don't know how they compute the COLA on SS but retirees should have a different basket of goods and services than working people.

A retired person usually isn't buying a first home, paying daycare, buying new cars or going to college. They feel the effect of food prices and medical care prices more and gas prices less. So the cost of living in a paid off home, heat, lights, food, car repairs and insurance should be weighted more heavily than the price of houses and daycare.
My mom has been retired 20 years and lived in a paid off home for 30 years. Her cost of living is about $500 a month for utilities and property taxes and $800 a month for food, gambling, gifts, decorating, gas, car repairs. Until a year or so ago she was budgeting $400 for spending and gambling but doubled it so she could gamble more. Now she has pretty much stopped gambling and still is using up her $800.
She is selling her house now so will pay rent but have the income from carrying the contract on the house of 1,250 a month. She isn't involved in selling the house or how much rent she will pay but my brother is taking care of it and told me the contract on the house but not what her rent will be. She will be living in his house so he will provide all the food.
For a poor elderly person food and medical cost is much more important than the price of houses.

 

[OAG]

I do not believe the cost of houses is in the CPI calculation while rental costs are.

 

[Texarkandy]

I don't know how they compute the COLA on SS but retirees should have a different basket of goods and services than working people.
....

I've done just a small amount of research on this myself in the past year and found that this subject of "which basket of goods provides the most appropriate measurement" is by no means a new idea/argument and has been continually studied and argued over by the government and private sector groups for many years.

For example: http://www.urban.org/publications/309221.html

 

[freebird5825]

very interesting post. i learned a lot about the perceptions of retired military/federal and active duty/still employed federal employees.

some background...in my household, the following benefits apply:
late husband - 4 yrs Navy, civil servant for 24 yrs, CSRS system.
myself - recipient of his survivor benefits, pension and self paid health benefits.
myself - eligible for a deferred FERS pension from MY career was 18 yrs as a civil servant.
DH2B - retired military with moderate pension but excellent health benefits. currently in civil service, FERS system.

so between all of us, the men served our country in uniform, and we all serve(d) our country as civil servants at lower pay but the guaranteed retirement BENEFITS made up for the salary difference. and our country will serve folks like us back in retirement.

remember Uncle Sam is a not-for-profit, unlike private sector which is "for profit". the taxpayer will never tolerate civil servants being given huge annual bonuses nor stock options nor incentive pay nor corporate perks nor profit sharing nor...did i miss anything?

i worked in private sector for 8 years. the biggest reason i switched over to civil service was....drum roll.....the BENEFITS, which are regulated by PUBLIC LAW passed by Congress. Congress will never change the those laws, cuz it needs to attract people to be civil servants due to the lower pay. we literally run the country.

and of course the military defend our country. and the law enforcement folks uphold our laws and maintain law and order. 24/7.
did you know a lot of civil service categories are on 24/7 recall status for national and local emergencies?

Private sector retirement benefits and compensations are not governed by public law, and never have been. you don't want to go there.

hence the difference in pensions...did that help?

 

[Independent]

I don't know how they compute the COLA on SS but retirees should have a different basket of goods and services than working people.

A retired person usually isn't buying a first home, paying daycare, buying new cars or going to college. They feel the effect of food prices and medical care prices more and gas prices less. So the cost of living in a paid off home, heat, lights, food, car repairs and insurance should be weighted more heavily than the price of houses and daycare.
My mom has been retired 20 years and lived in a paid off home for 30 years. Her cost of living is about $500 a month for utilities and property taxes and $800 a month for food, gambling, gifts, decorating, gas, car repairs. Until a year or so ago she was budgeting $400 for spending and gambling but doubled it so she could gamble more. Now she has pretty much stopped gambling and still is using up her $800.
She is selling her house now so will pay rent but have the income from carrying the contract on the house of 1,250 a month. She isn't involved in selling the house or how much rent she will pay but my brother is taking care of it and told me the contract on the house but not what her rent will be. She will be living in his house so he will provide all the food.
For a poor elderly person food and medical cost is much more important than the price of houses.

The BLS has been experimenting with special version of the CPI for "elderly" people. Over the last 25 years, their CPI-E has averaged 3.3%, as compared to 3.0% for the CPI-W that is currently used.

I've never looked at the details, but I think the CPI-E uses the same price database, but uses different weights.

Here's one of their papers: http://www.bls.gov/opub/mlr/2008/04/art2full.pdf

 

[Independent]

Au Contraire - today's workers do get the same deal - a COLA based upon CPI when they start drawing Social Security.

If they change the "deal" then they are changing it for their future selves as well. (for some of us that future is nearer & for some further away)

If you are talking solely about SS - that's akin to asking employees of a company to vote to reduce their future pension benefit, company 401k match, or whatever it is they have for the good of the company as a whole. I think many employees would rather see company management quit overpaying for raw materials, cut unproductive/unnecessary company divisions, consolidate functions, get more efficient, & quit taking management quail hunting and health spa retreats, and other things first.

Sure, under current law both current and future retirees get benefits indexed to the CPI. I think we're talking about changing the law.

IIRC, back in the '80s when they were designing the indexing, some people thought we should index to the lesser of the CPI and a wage index. I think one of the difficulties was the possibility of being whipsawed. It seems like we would want some sort of catch-up provision, and that's kind of complicated to write. No point to try to make that work when everyone could look at history and see that wage growth had outrun prices ever since WWII.

I think you're saying we shouldn't cut SS benefits when we're wasting money on other things. I can't disagree with the wasting part, but the General Fund is in such bad shape that it would take very big cuts just to get it to live within its means. I tend to think that SS should be a self-funding program over the long run, so I'm less concerned about the rest of the budget. I do know that the SS retirement program has very low admin expenses - far less than one year's COLA.

 

[beowulf]

Sounds a lot like sour grapes from those who could have worked for the federal government or the military but decided to opt for the higher salaries in private industry. Unless my math is off, midpack has worked 31 years in private industry. Somewhere in the middle of his career his company, as did many others, changed the benefit package. I know folks in the private sector who have sat in the same office for 30 years and worked for 5 or 6 different companies. Each with a different benefit package. They could have left, but decided to stay - it couldn't have been that bad.

I'm curious - why did you (midpack) stay with this company after getting shafted on benefits? Any reason you didn't have a military or civil service career? It was your choice and now you have to live with it.

I also have to agree with the poster who said that most SS benefits are fairly low - that's a fact. And the average civil service and military pension is not that high either. Better than nothing, but, except for the highest levels of employee, not a lot. 5.8% of not a lot, is still not a lot - and this is the highest raise in 26 years - not a real lot of money in between.

 

[Tadpole]

Perhaps off-topic a bit but I've been thinking about how wage inflation used to outpace price inflation. Starting SS benefits using wage inflation gave the retiree a start tied to their ending life-style rather than their beginning life-style.

I wonder how long the cumulative CPI will outpace wage increases and if the Pozen plan will really give a higher starting benefit to a slice of future retirees who are currently young. The implications are really frightening. It would mean that many young people start their careers at their maximum earnings and then fall further behind with time. Their life-style would degrade. Am I missing something here?

 

[Midpack]

Since I'm getting answers to questions I did not raise,
some folks are making false assumptions about how I view MegaCorps inevitable actions re: pensions/health care benefits, and
some folks aren't acknowledging where the revenues to pay SS/Fed benefits come from...

I'm done...

 

[ziggy29]

Sounds a lot like sour grapes from those who could have worked for the federal government or the military but decided to opt for the higher salaries in private industry. Unless my math is off, midpack has worked 31 years in private industry. Somewhere in the middle of his career his company, as did many others, changed the benefit package. I know folks in the private sector who have sat in the same office for 30 years and worked for 5 or 6 different companies. Each with a different benefit package. They could have left, but decided to stay - it couldn't have been that bad.

Keep in mind that 20-30 years ago when many of us were making career decisions, things like security in health care plans and pensions wasn't nearly the issue it is now. I suspect that if many people saw the steadily increasing gap between public and private sector benefits, they may have well chosen another way. And for many of us, it's mostly too late to revisit that decision now.

Plus, this much ballyhooed gap between salaries in government and the private sector is just not what it used to be. Many private sector workers (myself included) haven't had a "raise" that even matches the COLA for years -- in my case, probably not since 2000. That's gone a long way toward closing that gap -- before even considering the value of benefits.

I don't want to sound like sour grapes but if this trend continues, there will eventually be too much resentment for it to continue as the majority of people in the private sector pay more and more and more in taxes to support the retirement and benefits they have an ever-decreasing chance to get themselves. As more and more state and local governments start going under at least in part because of exploding health insurance and pension obligations for retirees and *everyone* pays higher taxes for it, it's going to start somewhere, someday. I just don't know where or when. I just hope it doesn't go back on any promises that have already been made.

 

[Texarkandy]

I think career Officers & NCO's as well as career federal civil servants in the United States should be well compensated & have a good benefits & retirement package & we should seek to attract the best & the brightest, don't you?

What we need to do is downsize the federal government & quit sending our military off into unwinnable conflicts - then reform Social Security - not cut benefits for current retirees.

Recall my previous post that the 5.8% COLA (subject of this thread) is for SS recipients & military & CSRS retirees - not active workers/military.

 

[beowulf]

Since I'm getting answers to questions I did not raise,
some folks are making false assumptions about how I view MegaCorps inevitable actions re: pensions/health care benefits, and
some folks aren't acknowledging where the revenues to pay SS/Fed benefits come from...

Same place the US gets the funds to pay for the DoD budget, the national parks, dams, flood relief, all the aid and subsidies that go to pretty much everyone, everywhere in the US, etc. State and local govs are the same - education, police, fire, etc. I don't think anyone has forgotten all this comes from taxes. My issue is why do you single out SS and civil service/military retirees? If you want to be fair, then cut everything by the same amount - let's say nothing, no matter how important, aids or cancer research, education, farm subsidies, whatever - none of them get an increase of more than 2%. That's sounds a lot more fair.

But you and I know that all these constituencies will never allow their individual bennies to be touched. I agree that no one could be clairvoyant 30 or 35 years ago and know how badly companies would start treating people, but the changes started over 20 years ago - plenty of time to find another job, so I don't think that's a good reason for staying with industry. Frankly, I believe it as and still is greed. The average fed nationwide makes about $70K a year. That may sound good to someone living in Minot, ND, but the folks on this forum expect to make to lot more so they can FIRE. Once again, you make your choices and you live with them. In high inflation years, fed and military salaries were held back to "Help the country whip inflation," in low inflation years, well, they just got low increases. And, if you are unaware, the federal retirement system changed in 1984 so drastically that employees hired after that date receive far less beneifts and a reduced inflation adjustment.

Sorry if your ox is being gored, but everyones knows where the money comes from - this 5.8% increase is tiny compared to the rest of the federal budget.

 

[W2R]

Keep in mind that 20-30 years ago when many of us were making career decisions, things like security in health care plans and pensions wasn't nearly the issue it is now.

To some people these weren't issues until lately when they developed problems that became newsworthy. However these sure were issues for a lot of us in the past when seeking employment, and benefits were exactly why I took my job as a federal employee, and why a couple of my relatives also became a federal employees in the 1950's-1970's.

It is hard for me to believe that anybody would not have considered the fact that federal employment and benefits were more secure than those in private industry if they bothered to think about it when seeking employment - - though I suppose it has always taken a cautious nature to even consider such things, just as right now it takes a cautious nature not to invest 100% in a single stock or annuity. Of course you might do quite well that way if the stock skyrocketed! Not my cup of tea, though.

20% of federal positions here in New Orleans remain unfilled despite heavy recruitment, due to low salaries. (Hey, there's a path to smaller government! ) If you are 57, you can take one of them and retire in 5 years with full health benefits and a small federal pension plus TSP and 5% match.

 

[ziggy29]

I think career Officers & NCO's as well as career federal civil servants in the United States should be well compensated & have a good benefits & retirement package & we should seek to attract the best & the brightest, don't you?

First of all, let's not equate paper-pushing federal bureaucrats with soldiers who are dodging bombs and bullets to keep us safe and (relatively) free. Not to demean other federal workers or their importance, but let's not compare them to folks being deployed in Iraq and Afghanistan.

Second of all, even if I accepted this, why should this not also apply to the private sector? If this were a good strategy to maximize efficiency of government, why aren't businesses also following that model? If "retaining the best and the brightest" is the overriding goal, AND if benefits are the way to do it, why wouldn't businesses do that and tear up their competition?

I guess I chimed in here because I'm just sick of the "if you don't like it, you should have went to work for the government" argument -- because it assumes we had crystal balls to know that the retirement security gap between pensions and 401(k) plans was going to mushroom in the next 2-3 decades, and it assumes we knew there was going to be a wholesale removal of things like retiree health insurance benefits in the private sector. I know I would have chosen differently if I knew how things would play out, but the usual argument assumes we have a crystal ball or we could turn back the clock and "undo" certain decisions. In that sense, it's like "blaming" us for putting money on the red when the wheel turned up black 20-30 years later.

I don't support taking anyone's current or promised existing benefits away. But I think we really have to rethink the promises we make to the next generation. States and cities are increasingly being strained by this, and I don't want this to get so serious in the future that it becomes a 'taxpayer revolt' which pits the public pension "haves" with the taxpaying "have nots" -- which could threaten the existing promises made to people already in the system, and that, IMO, would be wrong.

 

[ziggy29]

It is hard for me to believe that anybody would not have considered the fact that federal employment and benefits were more secure than those in private industry if they bothered to think about it when seeking employment

Yes, that is true -- even then, the added security and benefits were there, but the *degree* to which that security and those benefits would become more and more valuable -- dare I say almost critical to the ability to retire at all -- was easy to underestimate.

 

[Texarkandy]

25 years ago I took on a federal career in full knowledge I would never get rich but have a relatively secure job with benefits as long as I did a good job. They even told me when I started "you'll never get rich". And they were right - I'm not.

25 years ago others I knew would not even consider a government job (some even sneered upon it), knowing they were more likely to "get rich" in business or private sector employment.

I'm happy for those who did, & sorry for those who didn't - but for those who didn't and wish to rain on my parade - I can't help but see "sour grapes"

 

[W2R]

Yes, that is true -- even then, the added security and benefits were there, but the *degree* to which that security and those benefits would become more and more valuable -- dare I say almost critical to the ability to retire at all -- was easy to underestimate.

Not really!!! It was very easy for my relatives and me to envision businesses possibly failing one day, and that economies aren't always booming. It was also very easy for many wanting a high roller lifestyle to take a higher paying job in industry because they didn't want to think about icky possibilities and the fact that they were taking a gamble.

 

[W2R]

25 years ago I took on a federal career in full knowledge I would never get rich but have a relatively secure job with benefits as long as I did a good job. They even told me when I started "you'll never get rich". And they were right - I'm not.

Yeah, tell me about it! My colleagues in industry with equivalent qualifications or sometimes much less are earning six figures, which I will never see. Some of them were able to afford houses in California that are now worth millions even after the housing slump. I am happy for them but they made their choices and I made mine.

By the way, they are not into this "sour grapes" thing. In June when I was in DC meeting with them, they were asking me why I stayed with federal employment. I told them the benefits, and their response was yes, but if I would come and work for them I would be earning around $165K. Maybe in reality it would be less, but that is a lot more than I will ever earn.

 

[Midpack]

20% of federal positions here in New Orleans remain unfilled despite heavy recruitment, due to low salaries. (Hey, there's a path to smaller government! ) If you are 57, you can take one of them and retire in 5 years with full health benefits and a small federal pension plus TSP and 5% match.

Unbelievable, I rest my case...

 

[W2R]

Unbelievable, I rest my case...

It's amazing that despite this, nobody wants these jobs. The negative aspects of deciding to take one of these jobs are that the pay is low, the work is less than scintillating, the prestige is non-existent - - but benefits are part of the deal too. I guess they just aren't valued as highly as salaries by most.

 

[Texarkandy]

First of all, let's not equate paper-pushing federal bureaucrats with soldiers who are dodging bombs and bullets to keep us safe and (relatively) free. Not to demean other federal workers or their importance, but let's not compare them to folks being deployed in Iraq and Afghanistan.

Who's doing that? The 5.8% (subject of this thread) applies to SS recipients, retired military, & CSRS civil service retirees alike. There's no comparison been made that I've seen in this thread as to anyone's "importance". (except in your post above)

Your thought there really seems to me just so much "flag waving" you're doing there to support your resentment of federal workers pay & benefits.

(BTW - military pay & benefits are waaaay better nowadays then when I was in.)

Second of all, even if I accepted this, why should this not also apply to the private sector? If this were a good strategy to maximize efficiency of government, why aren't businesses also following that model? If "retaining the best and the brightest" is the overriding goal, AND if benefits are the way to do it, why wouldn't businesses do that and tear up their competition?

Good question - why aren't they? Some do. I've known a few spouses of federal co-workers with much better health insurance plans at their mega-corp s than we federal workers had under FEHBP. Some fully paid. Not to mention profit-sharing plans, vacation perks, company cars, etc, etc

I guess I chimed in here because I'm just sick of the "if you don't like it, you should have went to work for the government" argument -- because it assumes we had crystal balls to know that the retirement security gap between pensions and 401(k) plans was going to mushroom in the next 2-3 decades, and it assumes we knew there was going to be a wholesale removal of things like retiree health insurance benefits in the private sector. I know I would have chosen differently if I knew how things would play out, but the usual argument assumes we have a crystal ball or we could turn back the clock and "undo" certain decisions. In that sense, it's like "blaming" us for putting money on the red when the wheel turned up black 20-30 years later.

Well, so sorry if you are "sick" of it. Perhaps federal employees are "sick" of being painted as just so many slugs on threads like this - undeserving of anything more than minimum wage & no benefits.

No offense, but your rant (above) truly seems to be so much sour grapes.

I don't support taking anyone's current or promised existing benefits away. But I think we really have to rethink the promises we make to the next generation. States and cities are increasingly being strained by this, and I don't want this to get so serious in the future that it becomes a 'taxpayer revolt' which pits the public pension "haves" with the taxpaying "have nots" -- which could threaten the existing promises made to people already in the system, and that, IMO, would be wrong.

No argument there. Then why the animosity towards current workers & retirees?

Let's get rid of a bunch of federal programs, departments, earmarks, & handouts & ill-thought foreign entanglements & defense projects - then we can perhaps cut everyone's taxes - and keep a highly competent, well compensated, & trustworthy career civil service & career military.

 

[Keyboard Ninja]

20% of federal positions here in New Orleans remain unfilled despite heavy recruitment, due to low salaries. (Hey, there's a path to smaller government! ) If you are 57, you can take one of them and retire in 5 years with full health benefits and a small federal pension plus TSP and 5% match.

I always thought you couldn't apply for a federal job past the age of 37? I need to find the silly article that I read that from.

 

[W2R]

Not true. Age discrimination is illegal and the federal government hires plenty of people in their 50's, 60's, 70's, etc.

Edited to add: Actually, 37 is the AVERAGE age of newly hired federal employees. So, quite a few are older than that.

http://www.cbo.gov/ftpdocs/78xx/doc7874/03-15-Federal_Personnel.pdf