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Friday, October 29, 2010

Social Security: In a fix, or a fix?

A recent article in USA Today covers how for the second year in a row seniors will not receive their COLA (not a type of soda, it stands for cost of living allowance) added to regular Social Security income. The COLA is supposed to account for inflation and the overall increase in the cost of living based on the CPI. This annual adjustment adds to the burden imposed by the program and means that the tax increases every year that prices rise, this seems almost circular to me. The article goes on to list several statistics about how nearly a third of seniors depend on Social Security for nearly 90% of their income and on average makes up 40% on average of all retirees income. Yet the article goes on to list how without the additional COLA seniors can still get by.
As this article demonstrates how retirees are able to get by without the cost of living allowance I wonder if the COLA could be done away with all together. As we learned in class Social Security is not sustainable and within the next 100 years will be deep in the red. It seems obvious that something must be done about it. Now Social Security cannot be done away with immediately millions of retirees cannot have the proverbial rug pulled out from under them. However over time we need to begin phasing out the system to resemble more of an emergency insurance system perhaps like Professor Eubanks mentioned in class. To start people must start making adjustments now and begin by setting up their savings and investments for retirement. Another method of action would be to remove the COLA meaning that seniors will have to start making do with less, but less would have to be taken from the productive members of society. This is just a thought on how the looming problem of Social Security could start to be handled.

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