Inflation Social Security COLA and Jesus

The Worry Machine or the Purposeful Living Machine?

The worry machine is an awful device. It consumes energy, distracts from what is important, and produces nothing of value. In fact, I would say it produces nothing except for negative feelings, stagnation, and bad health.

Erma Bombeck said, “Worry is like a rocking chair; it gives you something to do but never gets you anywhere.” Sadly, many people live on that rocking chair.

Anne Tergesen and the Wall Street Journal

I don’t usually follow any journalists, but I do follow Anne Tergesen. This morning she wrote a piece that will create worry for many seniors. The title of the article was “Retirees Will Get a Smaller Social Security Raise in 2025—and That’s OK.” For many on Social Security that is not OK. It is a disaster because real inflation and the government’s measures of inflation are two different things.

Her article highlighted a couple of things that are worthy of consideration.

COLA is Cooling

Most people should be aware that Social Security recipients will receive a smaller cost-of-living adjustment for 2025. “The cost-of-living adjustment, or COLA, that retirees receive each year is tied to the average inflation data for July, August and September, so the actual increase won’t be clear until October. There was a 2.9% increase in July, and economists expect the August figure to have risen at an annual rate of 2.6%. The Labor Department reports inflation Wednesday morning.” – Anne Tergesen, WSJ.

She goes on to say that we can really expect about 2.5% based on recent analysis. “As of now, the Senior Citizens League, which advocates to protect Social Security and Medicare, is forecasting a 2.6% COLA in 2025 for the nation’s 68 million Social Security recipients. The Committee for a Responsible Federal Budget, a nonpartisan think tank focused on the federal budget, expects it to come in between 2.4% and 2.6%.” – Anne Tergesen, WSJ.

Inflation Risk and Investing

Frequent readers will know that I have often stated that inflation is a real threat to your purchasing power. Anne said something I think is worth repeating: “The degree to which retirees’ incomes have kept up with inflation depends largely on where their money is invested and the type of retirement benefits they have.” – Anne Tergesen, WSJ.

Saving your wealth under your mattress (in cash) is a clever way to lose the purchasing power of your savings. CDs are only a temporary relief. Bonds offer little long-term value and returns. The only way I have found to generate easy income is to invest in dividend growth stocks and ETFs.

Medicare and COLA

If you don’t know this, you should. When you start receiving Social Security and you reach Medicare enrollment age, then “Some of the Social Security COLA is offset by rising premiums for Medicare Part B, which covers doctor visits and outpatient care. For many Social Security recipients, the Part B premium is automatically deducted from Social Security checks.” – WSJ

Now here is the reality. You don’t get 2.5% more in your checking account each month. The government gives, and the government takes away. “Next year, the standard Part B premium is slated to rise to $185 a month from $174.70, according to estimates Medicare’s trustees released in May. That would consume 20% of the average $50 projected COLA raise.” – WSJ

What Does Jesus Say?

He says, “Do Not Be Anxious”

“Therefore I tell you, do not be anxious about your life, what you will eat or what you will drink, nor about your body, what you will put on. Is not life more than food, and the body more than clothing? Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? And which of you by being anxious can add a single hour to his span of life? And why are you anxious about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin, yet I tell you, even Solomon in all his glory was not arrayed like one of these. But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O you of little faith? Therefore do not be anxious, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ For the Gentiles seek after all these things, and your heavenly Father knows that you need them all. But seek first the kingdom of God and his righteousness, and all these things will be added to you. Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.” Matthew 6:25-34

My Response to the WSJ Article

Here is how I responded about the cooling inflation and our plans. We start by thinking about needs rather than wants (and then remember the Father knows you need them.) Think about your values, not the changing economic tides that seem to want to roll over you. Do you value God’s kingdom, righteousness, and his glory?

God cares more about his kingdom and his righteousness and his glory. Part of his kingdom, if you are a true Christian, is you. Furthermore, he offers his righteousness to you, and you will be able to participate in his glory. We have been justified, we are being sanctified, and we will be glorified. That is inflation in the life of a believer.

All scripture passages are from the English Standard Version except as otherwise noted.