Retirees in particular should be outraged at the federal government’s economic stimulus plan: http://news.yahoo.com/s/ap/20080124/ap_on_go_co/economy_stimulus
House leaders and the White House announced today — Thursday Jan. 24, 2008 — a tentative agreement on an economic stimulus package of roughly $150 billion that would pay stipends of $300 to $1,200 per family and provide tax incentives for businesses to encourage spending. A stipend of at least $300 would be paid to all workers receiving a paycheck, even those who did not earn enough to pay taxes last year.
The plan does not extend low income programs like unemployment benefits or food stamps. And, most critically it does not offer anything to seniors not receiving a paycheck (Social Security checks do not count.) Retirees who do not “earn a paycheck” but pay taxes do not benefit at all by this “stimulus” package.
Retirees need to think about the following questions and issues:
- Do you believe that this plan will prevent a recession or delay it?
- What long term problem does $300 per family solve?
- Will inflation continue to increase and, if so, how are you going to protect yourself from inflationary pressure?
The current economic crisis is not about liquidity, it’s about solvency. A cash injection might keep the children and grandchildren of retirees spending on HDTVs and Xbox 360s, but it is not going to pay off anyone’s bad mortgage. It will just end up inflating the economy and depleting what’s left of the U.S. dollar.
Most alarming is that the cost of food, health care, and energy have risen at a rate far faster than wages have increased for the average American. Some cash is not going to loosen wallets tightened by the rising prices of these core goods.
Retirees earn a fixed income and are the group who are most hurt by inflation. The value of your existing savings and income are greatly diminished. (Read more here about how inflation can devestate a good retirement plan: http://www.newretirement.com/Planning101/Inflation.aspx)
So, this economic stimulus plan does not offer any short term relief to retirees and could potentially hurt them even more in the long run because it does nothing to cure the fundamental economic ills we are facing.
The Fed is cutting rates to bail out Wall Street and the US economy by injecting cheap money into the system, however the rest of the world is catching on leading to the drop in the US Dollar (aka inflation). Inflation is a huge risk to retirees living fixed incomes.
Gold topped $900 an indicator that people think inflation is here and a continuing risk….http://www.reuters.com/article/oilRpt/idUSN2438694420080124
Three points to the above comment. (1) Overall there has been no sizable inflation. Yes, food and energy are up. However other retail goods are not up (clothing, housing, etc.) despite higher energy costs. Now that food is energy (ethanol) look forward to that being a problem, until the ethanol craze is over. (2) A slowly falling dollar is not bad for us. It makes our exports cheap and imports expensive, so buy American. This will lead to our companies prospering internationally. Luckily, we are mostly a self sufficient nation, except in energy. We need to import oil because of current energy policies. (3) It may be too late for some retirees, but you point to why you cannot plan to live on “fixed” income. You at least need to have planned ahead to grow with inflation. That means keeping a portfolio invested partly in inflation protected securities (like stocks). If your return is based solely on pension, social security, or bonds then you are not inflation protected. For those who can, be sure to move a sizable portion over to equities now while the market is still down.
Even Ron Paul last night, on the Republican debate, says seniors get screwed, because REAL inflation is around 10% and we got a measly 2.1% increase this year. Hell, my local school levy just ate up my whole years increase.
I can not believe politicians are so profoundly STUPID as to ignore the millions of VOTING retirees. If there actually are reasons for this snub, they should make them evident before the whole kit-and-kaboodle get canned in the next election!
Looks like the Seniors voices are being heard!
Senators consider rebates for retirees
By ANDREW TAYLOR, Associated Press Writer 1 hour, 2 minutes ago
WASHINGTON - Retirees living off Social Security are frustrated that they won’t get tax rebate checks through a bipartisan economic stimulus package before the House. Senate Democrats Friday began efforts to include them.
http://news.yahoo.com/s/ap/20080125/ap_on_go_co/economy_stimulus
_Where are the AARP lobbyists? What about people not old enough for Social Security yet and living on a pension or money from employer 457 investments? WE PAY TAXES and get no consideration whatsoever!!!!
Tax rebates should be for everyone who pays taxes, regardless of the type of income they have.