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Catching Elephant is a theme by Andy Taylor
The Wall Street Journal had an in interesting article regarding the (lack of) inflation adjustment for social security (here).
In the article, they reiterate a common feeling that measuring inflation is a “clumsy practice.”
“We have to use these average weights” in the consumer-price index, says Ken Stewart, an economist at the Bureau of Labor Statistics. “If you spend more on medical care, tobacco, college tuition — these are items that over the past 25 years have gone up faster on average than other items. If you’re spending more money on consumer electronics and TVs and things that have fallen in price, you may not see any inflation out there.”
The key takeaway here is that having retirement income linked to inflation is just not as safe as people may write if off to be. If one’s personal consumption differ’s widely from the generic basket, then the inflation realized by the individual will be widely different. Now this could be a good or bad thing depending on if one is buying more electronics or more medications. But I’m guessing more retirees are in the same boat as the person who left these comments :
“Just found out the the co-pay on my name brand medications will rise 792% next year. No COLA (cost of living adjustment)? BS.”
