Here's Why You Can't Count on Uncle Sam to Fund Your Retirement

Editor's note: Today in the Empire Financial Daily Weekend Edition, we're sharing more insights from Pete Carmasino, the chief market strategist at our sister company Chaikin Analytics. In this essay, Pete shares a dire warning for retirees or those hoping to retire soon... The key benefits program for seniors was in trouble before 2022... and […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily Weekend] Editor's note: Today in the Empire Financial Daily Weekend Edition, we're sharing more insights from Pete Carmasino, the chief market strategist at our sister company Chaikin Analytics. In this essay, Pete shares a dire warning for retirees or those hoping to retire soon... --------------------------------------------------------------- Here's Why You Can't Count on Uncle Sam to Fund Your Retirement By Pete Carmasino --------------------------------------------------------------- [It's the end of an era]( Whitney Tilson just made a huge announcement regarding the future of Empire Financial Research. As he says in this short video message, "It's the end of an era for Empire." [Click here to see the full message](. --------------------------------------------------------------- The key benefits program for seniors was in trouble before 2022... and now, it might break... You see, Social Security recipients get a boost in their monthly benefits to help fight inflation. The raise is known as the "cost-of-living adjustment" – or "COLA," for short. The Consumer Price Index for Urban Wage Earners and Clerical Workers ("CPI-W") drives the percentage of the COLA hike. And the U.S. Bureau of Labor Statistics calculates CPI-W data every month. Importantly, the report in mid-October will tell us the expected COLA for 2023. Due to our ongoing battle with inflation, current estimates for this increase range from 8% and 10%. That's significant... The reserve levels in the trust that backs these Social Security benefits were already running down before any big COLA increases. Last year's report from the Board of Trustees projected that reserves would run out by 2034. But the thing is... the coming COLA increase in 2023 will likely shorten the life of these reserves even further. And I'm not sure how the reserves can manage another large hike. Let's break it all down... The better-known CPI for July showed that inflation was up 8.5% over the past 12 months. It remains at levels not seen since the early 1980s. And the CPI-W data was actually worse. If you calculated the CPI-W year over year, you would get a 9.1% jump. It's clear that inflation is still out of control. And in turn, influential groups that track Social Security benefits are making educated guesses about the potential COLA raise for 2023... An analyst from popular retiree group AARP recently said, "We can expect a COLA in the 8% to 10% range. Another analyst from the Urban Institute suggested a "reasonable guess" of around 9%. And an advocacy group called the Senior Citizens League projected that the COLA increase could be as high as 9.6%. That would be the biggest increase since 1981 by a wide margin... The 2022 COLA increase of 5.9% was already the highest in about 40 years. And I recently looked up all the COLA adjustments since 1975 to get an average of 3.7%. So in other words... if the COLA raise equals 9.6% in 2023, it would be 2.5 times the long-term average. --------------------------------------------------------------- Recommended Link: [This financial fortress just went 'on sale']( This might be the greatest business in the world... And yet, no one talks about it. But right now, Herb Greenberg says investors have a chance to buy its shares at a deep discount. [Full story here](. --------------------------------------------------------------- And it could be even worse... The analysts from the Senior Citizens League noted that if inflation runs higher than the recent average, the COLA increase could be 10.1%. (On the flip side, if inflation runs lower than the recent average, the group said the COLA could be 9.3%. That's still high.) Folks, in the short term, the COLA increase might be great for people currently receiving Social Security benefits. It will help provide some relief in the ongoing battle with inflation. But if you're planning on these benefits to support you in your future retirement, you might want to think again... The Board of Trustees' 2021 annual report was grim. It projected benefit reductions by 2034. That was even before we knew 2022 COLA would receive a near-record-high adjustment. And now, we're likely headed for another significant increase in 2023. No matter where the exact numbers land during this round of COLA, it's clear that the adjustment will take a big toll on Social Security. We can't avoid that harsh reality. Your best bet is to take matters into your own hands... Start investing in equities today. As I said back in February, you can't count on Uncle Sam to fund your retirement. Instead, do it yourself by saving and investing before it's too late. Regards, Pete Carmasino September 3, 2022 Editor's note: In the past 30 days, estimates for the odds of a recession soared from 15% to 90%. Investors are confused and scared... But you don't have to be. 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