New Budget Plan Takes Aim at Retirees
The proposed budget reform announced on Wednesday suggests that retirees should be anticipating some major changes to the way their retirement will play out. To name a few of these changes, the proposed budget aims to make cuts to Social Security income, Medicare coverage, IRA contributions and more.
It is common understanding that the federal government is in need of a new budget that will begin lowering the debt our nation now holds. Our president announced a new budget proposal today which shows the direction the fiscal policy will likely be headed. Even if the budget does not pass on Capitol Hill, it is a strong indicator of what will eventually take place in reaction to the need for debt reduction.
Perhaps the biggest threat to a retiree’s prospective future is the proposal to change the way Social Security payments are made. The change would stem from the proposal to alter the way inflation is measured by our government. President Obama wants to switch to what is referred to as chained CPI. In summary, this new measurement of inflation would reduce the amount of annual increase made to Social Security payments for cost-of-living adjustments (COLA). Although the change in measurement is expected to be around 0.3% lower than the traditional measurement of inflation, the real threat is how that impacts retirees years down the road, when many are most reliant of their Social Security payments.
If chained CPI did in fact become the new measurement on which the Social Security Administration based their COLA adjustments, by the time a retiree is in their 90s they would be facing more than an 8% reduction in their Social Security payments.
To read more about the proposed changes to Social Security and other elements to retirement in America, be sure to follow the Crash Proof Retirement Newsletter as it will stay up to date with the changing landscape of retirement.