Jamie Hopkins: Congress Will Fix Social Security — Eventually
Social Security is not a perfect inflation protection asset, but it is about as good as there is out there. Remember, the 5.9% was for last year, and if inflation is higher this year, it will adjust for next year.
In the past, seniors often saw higher inflation rates than the general population; it is possible those tides have turned a bit this year and seniors might see lower inflation rates than the general U.S. population. Deferring Social Security is still a good way to deal with inflation and running out of money.
3. What is your opinion on whether the COLA index should be changed from the Consumer Price Index for Urban Wage Earners and Clerical Workers to the CPI for the Elderly?
The CPI-E is a better way to run Social Security COLA adjustments. In the past, it has been higher than the CPI-W, but it cannot always be this way. Using the CPI-E more aligns with the goal of Social Security, to provide retirement income that lasts a life and adjusts for inflation to keep people out of poverty.
4. What lessons can advisors/clients learn from today’s volatility mixed with higher inflation and the impact on portfolios? Are there any products they should incorporate into portfolios now?
I always go back to diversification and planning. Know why you are spending, why you are saving and why you are investing. If you don’t know the why behind your actions, you will end up with a portfolio and strategy with no meaning.
5. Do you believe that Congress will step up and make changes to Social Security, including making the appropriate funding, in the next couple of years? Why or why not?
Congress will fix Social Security, but it is not likely to occur in 2022 or even 2023. The issue is there, but a lot [of leaders] in D.C. see it as an issue that can be dealt with in the future. There is also just not enough agreement in how to fix Social Security in D.C. It should be a mix of taxes, cuts and expansions of benefits — but the mix of each has no consensus today.
