Weekly Notables

from the Desk of Brian Bickett, CFP®

for the Week of October 02, 2019

Social Security COLA…

This week’s retirement income article covers the expected Social Security COLA to be announced later this month, preparing Social Security Retirement Benefit recipients to be disappointed as it is expected to be lower than the 2019 COLA of 2.8%.

The second half of the article discusses the effects of COLA being tied to the CPI-W.  The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is based on spending of households meeting two requirements: 1) more than half of income comes from clerical or wage occupations; and 2) at least one of the household’s earners must have been employed for a minimum of 37 weeks in the previous 12 months.  

Neither of these requirements describes the typical retiree receiving Social Security Retirement Benefits, none that I work with anyway.  Changing the COLA calculation to use the CPI-E (households where one member is 62 years of age or older) has been discussed recently and is included in the current version of the proposed Social Security 2100 Act.  It seems like it would be hard to argue against the switch.  However, retiree’s should be wary of developing unrealistic expectations of increased future COLA’s as there are definitely periods of time where the CPI-W has outpaced the CPI-E.  

Enjoy the ride of YOUR life!

— Brian

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2020 Social Security COLA is expected to be Minimal

(Alessandra Malito, MarketWatch) – This retirement income article explores the expected Social Security cost of living adjustment (COLA) that will be announced later this month.  While it is expected to be significantly less than 2019’s COLA of 2.8%, what is most interesting is that the over the past decade the COLA has averaged 1.4% versus the 2000 to 2009 average of 3%.  This would not be concerning as the COLA is intended to keep up with inflation, however there is some valid concerns about if it is tied to the appropriate inflation index.

Lending Money to Friends or Family is a Recipe for Disaster

(Lorie Konish, CNBC) – This personal finance article elaborates on a recent Bankrate survey that found that just under half of adults who lent money to friends or family were never paid back and/or had their relationship with the borrower permanently damaged.  Another regret of survey participants was lending out their credit cards.  The survey results clearly support the adage: “The only time you should lend money to friends and family is when you are comfortable simply considering it a gift”.

Don’t Quit Your Job Just Because You Don’t Like It

(G.E. Miller, 20 Something Finance) – This career article explores the reasons most Americans dislike their jobs including being over-worked, over-stressed and lack of meaning, purpose, and pay.  It goes on to support what the title suggests including having a well thought-out plan before leaving a current employer.  The article also declares the truth of many, but not all, jobs: that it’s about getting paid to do stuff that others don’t want to do for free.  

Where’s Brian?

Teaching Social Security classes thru the Community Education of the Black Hills

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