Working Americans have paid into the social security system and are expecting a return in their retirement. Currently the cost of living adjustments are calculated using the Consumer Price Index (CPI). However, a new budget proposal presented by the White House attempts to use a different rubric to calculate cost of living. The potential changes have many advocates up in arms. This change could potentially decrease their income and lead some down the slippery slope to financial ruin.
All the controversy surrounds the chained Consumer Price Index. Instead of measuring changes in prices, the chained CPI measures how people react to changes in prices. The result of changing how the cost of living is calculated would save the government money while giving Social Security recipients smaller raises over time. The Obama administration sees the change as a middle ground solution to preserve Social Security.
An unexpected life change such as this one could have a major impact on senior citizens that live on a fixed income. The modest adjustments to keep up with inflation are crucial to maintaining payments on medical bills and making mortgage payments. When individuals are unable to make these payments they may find themselves facing bankruptcy.
Personal bankruptcy can be a new start for those who are eligible. For senior citizens who are unable to keep up with medical bills, Chapter 7 Bankruptcy allows for the discharge of that debt. If foreclosure is at hand, bankruptcy may also be the answer to ending those proceedings. The first step is to have a consultation completed by a qualified bankruptcy attorney.
Source: NPR, “Will You Be Chained To A Smaller Check in Retirement?,” Marilyn Geewax, April 9, 2013.