Don't Count on Social Security Increases

For the first time in over 30 years, Social Security recipients will not enjoy a cost of living adjustment (COLA) for 2010. This comes as a disappointment and in many cases a hardship, for seniors already facing declining property values, diminished investment portfolios, and rising health care costs.

Tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), Social Security benefits have automatically risen every year since 1975. The highest increase was 14.3% in 1980; the lowest prior to this year was 1.3%, which occurred both in 1986 and 1998.¹

As if that news is not bad enough, there is no anticipated increase for 2011 either.

Same Income, More Bills

According to the AARP, roughly 75% of Medicare recipients will be protected from premium increases to their Part B plans so long as the Social Security COLAs are stayed. But that's not the case for one quarter of Medicare recipients who are not protected under a "hold harmless" provision either because they have recently enrolled, have opted not to have Part B premiums deducted directly from their Social Security check, or have too much income. These seniors could see 25% premium increases even though their Social Security income remains unchanged. Higher premiums biting into unchanged income can only mean one thing: less money to live on — not something any senior would be enthusiastic about hearing.

A Guaranteed Income Solution that is Actually Guaranteed²

Many of today's seniors rely on Social Security, assuming its income they can count on since it is backed by the government. But, Social Security's tie to a fluctuating Consumer Price Index can lead to a certain amount of unreliability as evidenced by this recent turn of events.

For truly guaranteed income in retirement, seniors may want to consider a Lifetime Income Annuity³ from New York Life. It can provide income payments cannot be outlived and the payments are not affected by what's happening in the economy or with an index. Plus, if inflation is of concern, you can opt to purchase the Annual Increase Option, which will adjust income payments from 1 — 5% each year according to your preference. This increase is not tied to any price index, so you'll receive this increase every no matter what.

Peace of Mind

Retirement is not the time to experiment with how far you can stretch a dollar or gamble with the possibility of outliving your assets. The Lifetime Income Annuity offers true guaranteed income you can count on, even when other sources of income might let you down.

For most jurisdictions, the policy form numbers for the Lifetime Income Annuity are: 203-169 for the Life Only Annuity; 203-170 for the Primary and Secondary Joint Life Annuity; 203-171 for the Life With Percent of Premium Death Benefit Annuity; 203-172 for the Life With Cash Refund Annuity; 203-173 for the Life With Period Certain Annuity; and 203-174 for the Primary and Secondary Joint Life Annuity With Period Certain Annuity. State variations may apply.

This educational third-party article is being provided as a courtesy by New York Life Insurance Company. For more information on this topic, contact me.

¹ Social Security Administration, Automatic Increases, Cost of Living Adjustments, October 15, 2009.

² Guarantees based on the claims paying ability of the issuer.

³ Issued by New York Life Insurance and Annuity Corporation, a wholly owned subsidiary of New York Life Insurance Company, 51 Madison Avenue, NY, NY 10010.

SMRU: 00409013CV