Thursday, October 22

What lower prices?

It's not just economists who are insisting the recession is over. As many of you have probably heard, Social Security recipients won't be receiving a cost-of-living adjustment (COLA) this year. This is a first in 35 years.

So what heralded this change? Why, it's simple: Prices are going down. Or so says the equation that determines the COLA.

My only question: Where, exactly, are these lower prices?

Looking through the grocery store, I don't see much of a change. All that packaging that got smaller, while prices remained the same (or worse)? Still small. The prices? Still big.

There are plenty of food sales that make prices seem lower. And if you can catch those sales, you can definitely eat cheaply. But most of these tactics were around during boom times, as well. They just had fewer fans.

So where are these lower prices that made the COLA equation believe that seniors and people with disabilities could get more bang for their buck? Simple: Non-necessities.

Sure, you can get a great deal. If you go shopping, the stores practically roll out a red carpet. Everything's on sale, all the time -- because it has to be. People have finally clamped their wallets shut on a lot of unnecessary spending. They are occasionally lured in by a good sale, but they're wary and ready to bolt if things get too pricey.

Merchandisers aren't the only ones clamboring for people, either. Restaurants are flogging meal specials -- usually in the realm of 2 for $20. It's hard to walk past a bar or club without tripping over a happy hour special. Salons and spas are in on the act, too. Not many people can find room for $60-70 massages (plus tip). So there are introductory offers everywhere. Anything to get you in the door and familiar with their level of service.

So, yeah, there are great opportunities for specials that will stretch your dollar. But -- and here's the acid test -- how many of these places are patronized by senior citizens and other people on restricted budgets?

I'm sure that some seniors and people with disabilities pop into Chili's, Outback and TGIFriday's, but those folks aren't exactly the target audience, are they? People living on truly fixed incomes -- under $20,000 per person per year -- aren't going out to eat much at all. And how many seniors do you know who go to bars and clubs? Meanwhile most SS disability recipients are unable to work more than part-time. (If you earn more than $980 a month, you stop receiving benefits.) That means they're probably not healthy enough to go out a lot either. Trying to work around a disability, I can assure you, takes a lot out of you.

Yes, everyone needs clothes and shoes at some point. But these are people who know how to make do and how to do without. They shop at thrift stores or, at the very least, huge sales -- and they come armed with coupons. There are always cheap shoes to be had at places like Big 5, Target, Wal-mart, or on various store clearance racks.

But what about things you can't avoid? You can be careful about utilities usage -- turn off the lights, use the thermostat less, take quicker showers -- but you can't avoid it completely. And I've yet to hear about those prices lowering. (If anyone does know of a case, please feel free to correct me!)

In some areas, rents have lowered overall. But mostly it's just a proliferation of specials. While this can help minimize rent, you still have to be free of a lease and have good credit. In addition, the better offers are usually from the nicer communities. If you're just going for affordable rent, you won't get much of a break. And all the recent foreclosures mean a lot of renters on the market. It's a mixed bag. Oh, and let's not forget that you have to be able to save up a deposit -- if not first and last month's rent plus deposit. Could you do that on $1,000 a month?

If they're lucky, seniors will have their own homes. Then they are only responsible for insurance and property taxes. Both of those keep increasing, although some people have at least gotten a tax break as their house values plummet. If you rely only on Social Security payments, that could easily account for 1/3 of your income. And you better hope that no events cause you to need your homeowners' insurance. That will just increase your premiums.

Meanwhile, gas prices are back on the rise, assuming you have a car. If you don't, you can get discount fares on buses -- assuming the transit is any good where you are -- but even those costs will go up, especially as gas prices keep increasing.

Groceries can be gotten cheaply, of course, if people shop the right sales and stock up whenever possible. Of course, if you do this by car, it can mean more gas, as you shop at various stores for what you need, and perhaps make multiple trips to truly amass a full pantry. If you have to do it by bus, you're looking at a lot more problems and a lot more physical work. And all those sales are still based on smaller packages and/or higher prices.

And let's not even get into all the doom-and-gloom predictions of runaway inflation -- which would mean we actually get less for our dollar, not more. Even if the dollar does recover, there's absolutely not guarantee that the recovery will last. In fact, it seems that every proclaimed recovery -- in dollars and stocks -- is followed by uncertainty or even reversals. So what if the dollar plunges in the last half of the year? What do seniors do then, besides wait for the next COLA determination?

So, to recap:

  • There are lower prices -- but almost exclusively in items that most seniors and people on disability do without. There are food and drink specials, but most of the Social Security population don't make it out to bars and clubs, or even too many restaurants.
  • On the other hand, basic costs of living, such as groceries, rent/property taxes, utilities and transportation, keep increasing.
  • The dollar is fluctuating and a lot of people are predicting inflation -- runaway or otherwise. Any recovery that does happen, may not last.
  • Seniors and people on Social Security disability are getting more for their money, which is why they don't need any cost-of-living adjustment in the coming year.

Can anyone explain this to me? I don't speak bureaucrat.

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