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The wholesale price of food increase is the biggest since 1974, with harsh weather and energy costs being blamed.  In the warmer months ahead, supply problems are likely to result in continued higher gas prices.  Some experts are predicting this trend will continue for the remainder of the year.  This means inflated costs for home heating next winter.

In the meantime, the Federal Reserve continues to print US dollars, which decreases the value of the dollar making the price of imported raw materials and finished goods higher.  So the Fed must deal with a double-edge sword of reduced consumer purchasing power and inflation.  Solving one issue requires lower interest rates while the other calls for raising them.

If demand for products and services diminishes, the slow recovery will become even slower and possibly come to a halt.  This could be when stagflation sets in, much in the way it did in the late ‘70s.  These problems are occurring in the second year of the cost of living adjustment (COLA) freeze on Social Security benefits.  So Americans on fixed incomes are feeling the bite in three vital areas: food, gasoline and energy costs.

On top of the apparent problems that can be seen at the cash register, there are hidden problems facing New Seniors  and other fixed income groups.  If the federal government does not get the deficit under control, entitlement programs such as Medicare and Social Security will suffer or taxes will go up.  Some states are raising taxes; others are trying to extend or make permanent those taxes and fees that were supposed to be temporary.  And local counties and municipalities are faced with similar financial problems.

Unemployment benefits continue for nearly 4 million people, the new health care program will provide insurance for about 33 million people.  The cost at the federal and state levels is enormous, since half the newly insured will be covered by Medicaid with the states picking up about half the costs.  Where will the money come from?

New Seniors must let their federal, state and local elected representative know how they feel about the financial situations that are causing our quality of life to be pushed to the breaking point.  They say our taxes won’t go up and our benefits won’t be taken away.  But paying higher prices for the things we need means we have less money to spend, so this is tantamount to a tax increase.

Remind the politicians that those 65+ accounted for nearly 25% of the vote in the last election.  Tell them if they don’t take appropriate actions now, we will take actions at the polls in the next election, which is only about a year-and-a-half away.  

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Why blame us?  Because we are no longer the revenue source we once were. This year Social Security (SS) will pay paying out more in benefits than it takes in for the first time since 1982.  The reason is simple.  In 1960 there were 5 workers for each person receiving SS.  This number fell to just 2 workers for each recipient in 2010.  The problem is soon to be compounded with the first of the 76 million baby boomers reaching 65 next year.  In fact, millions of boomers will turn 65 every year until 2030. 

The SS contributions by individuals and their employers never made it to a lockbox, so it could be invested for the future.  Instead Congress, over the years, spent the money it collected on unfunded projects, leaving the American citizens with a great big I.O.U.  Due to  this lack of foresight the government must borrow money from China, Japan and other countries.  The effect this will have on the national debt as the SS recipient pool increases in the years ahead is not a pretty prospect.

Months of debate stirred the murky waters of health care reform and brought many issues to the surface.  For starters, the government intends to cut $500 billion from Medicare.  This is to be accomplished by reducing waste, fraud and abuse – something that could and should have been done as a matter of course, but was not.  Seniors can expect current benefits plans to be altered with the result being lower quality of care, fewer patient choices, higher costs and/or more taxation.

As politicians revisit the floundering heath care bill, it is unclear what will emerge.  In the meantime, insurance premiums continue to increase while SS cost of living adjustments (COLA) are frozen for the next two years.  Will Washington do anything to help retirees on fixed incomes during these difficult times?  Or, must we fend for ourselves and hope lost savings will be recovered, home prices rebound and the economy improves enough to make us financially healthier than we are now?

We are not looking for handouts.  We paid into the system for years and were promised certain benefits.  We expect them, because it’s our money.  Unfortunately, the SS funds are gone and Medicare is under the budget knife as the retiree population continues to grow.  This adds up to great concern about the future.  Our earning days are over, or soon will be, so we can’t generate more income.  If our elected representatives don’t consider us worth preserving, then we must replace these tone-deaf politicians with people who respect our situations and are willing to respond to the needs of all New Seniors.

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“Many older workers can’t wait to retire, while many younger workers desperately need work.  My plan enables older workers to take early retirement, thereby freeing up those jobs for younger workers who are currently unemployed.  If just 25% of eligible workers choose to retire early, we can very quickly open one million job opportunities.  These are not temporary jobs, but permanent jobs that already exist in our economy, even under the current recessionary circumstances,” said Kucinich.

To many, this might seem like a sound idea, since more than two-thirds of workers elect to take early retirement based on Social Security (SS) rules offering reduced benefits at age 62.  The Congressman’s plan would reduce the eligibility age to 60 for the first million (25% of those eligible) who are willing to retire, now.  The money would come from the funds already allocated for job stimulus and health insurance would be covered by a different federal spending act.  This is still the taxpayers’ money.  Right? 

The broad concern about such a move is that it does not create new jobs; instead this simply replaces one worker with another.   In essence it takes a productive, experienced worker and replaces them with one that is younger but untrained.  Of course, the argument may be that the newer one will do the job for less money and fewer benefits.  

Public sector employees may welcome early retirement, since they usually receive better benefits after leaving the workforce than do those from the private sector.  Unfortunately, taxpayers are saddle with these retirement benefits (up to a whopping 90% of what they got while on the job) for the rest of the employee’s life.  And if they so choose, the employee is young enough at age 60 to find another job, with the net result to them being more income than before.  This also means taking a job that might have been filled by someone who is already unemployed.  Does this make sense?

Pre-boomers know what its like to plan for retirement and many of us have made the transition.  We know it’s not as easy as those who have yet to go through the process think it is.  The prospects of living another 25 or more years is worrisome when our fixed incomes are affected by the financial market volatility and out-of-control government spending.  On top of this we are faced with a freeze on SS benefit increases and a $500 billion decrease in the Medicare budget. 

The 65+ market is about to experience a population explosion as boomers become New Seniors next year.  Before fixing anything else, well-meaning politicians need to talk to those of us living in retirement before trying to add more people to our roles.

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You’d have to be in a coma to not be aware of what’s going on inside the DC beltway.  Stimulus spending, “green” programs and energy taxes, health care reform, plus budget deficits projected for years to come are but a few of  the issues that will affect pre-boomers and the lives of our children and grandchildren.

Then, there are gaps in the state budgets.  Here in California, we posted a 26.3 billion dollar shortfall and the legislators compromised on a spending bill that leaves us 1.1 billion in the hole.  To accomplish what is a temporary fix at best, state workers will get less money, teachers will laid off, welfare programs will be cut, prisoners will be released onto the streets, college tuitions will be raised, and as many as 50 state parks will face closure.  All this is on top of putting into law the highest sales tax in the country, which has caused many residents to flee for less expensive locations.  Businesses are leaving California too, because of taxes and a variety of restrictions.  Therefore state revenues continue to decline while unemployment has increased to 11.6 percent, topping the national average by 22 percent.  Unless something is done to attract employers back to the state bring in new companies, the budget woes for California are far from over.

Of course, problems have a way of trickling down to the local level, so Los Angeles is faced with its own deficit debacle.  City services are under the threat of being cut way back – police, fire and other essential needs.  The city council depends on federal and state funds to replenish its coffers rather than doing proper budget planning to run this town.  Our schools are a mess, yet we continue to pour good money after bad to fix a problem that, in reality, can’t be fixed until we dismantle the LAUSD and try to build the once proud system back to its former glory, but special interest groups along with cowardly politicians will not let this happen.  Instead, local residents get hit with a variety of taxes, outrageous water charges and special fees to keep the city afloat.  And now, the council wants to override the will of the people by trying to raise property taxes.  This will destroy the already depressed real estate market and result in many pre-boomers and others on fixed incomes to lose their homes, because they can’t afford the taxes.

We can’t afford to sit back and do nothing.  It’s time to let politicians know the free ride is over and they will be held accountable for campaign promises and for fiscal matters.  The days of being elected for “bringing home the pork” are over.  We need proper planning, less patronage and balanced budgets as a start.  If your elected representative isn’t willing to do these things, then why is that person your elected representative?  Together, let’s take the actions to make these interesting times a blessing, not a curse.  

Throughout the last half of the 20th century and until the recession hit us like a ton of bricks we spent without much regard to the future.  Accept for some bumps along the way, the road was pretty smooth and everything was rosy.  We were so used to the good times there was little thought about the possibility of an impending disaster ahead.  Pre-boomers, for the most part, were retired or making plans to slow down when the wheels fell off the nation’s economic engine. 

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We draw back in fear and almost immediately shut down our spending.  A fixed income, or the prospects of one, coupled with dwindling savings and a reduced investment portfolio served as a wake up call with all the finesse of a drill sergeant shouting at recruits to get out of their bunks at 4 AM.  Things seem to be improving, albeit at a slow up and down rate.  It will be sometime before we feel financially comfortable again.  And, chances are, the pre-boomer generation might never look at the future in the same way we did 18 months ago.

Nonetheless, there are many things for which to be thankful.  It’s been a good run for us, and it’s not over yet.  We had the opportunity to live life and experience all it joys and sorrows.  This has made us stronger, wiser and hopefully better individuals.  The lessons we’ve learned are to be passed on to others: family, friends and the community at large.  This is our right of passage as well as our responsibility.  And this holiday season we have a chance to make others better off by making donations to those who need our help.

You have probably received mail from numerous charities asking for donations.  Giving was down last year and is expected to continue to be low at a time when more people are in need.  The folks served by these worthwhile organizations are in bad shape; many suffer physically, emotionally, spiritually and certainly financially.  Pick a charity, just one will do but select more if you can, and write them a check.  It doesn’t have to be for much; 5, 10 or 20 dollars from each of us can make a big difference.

Recently, I thumbed through a stack of the donation request letters and was about to cull out what I thought were the marginal ones.  Instead, for no apparent reason, I decided to send something to all of them.  It was amazing; with each check I wrote the better I felt.  Soon I caught myself whistling the holiday song “White Christmas.”  When I finished sealing the final envelope, I was acutely aware that the true gift of Christmas is the one you give to someone else.

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A jobless recovery means a slow recovery.  Consumer spending, which accounts for more than two-thirds of the nation’s Gross Domestic Product (GDP), will not be the driving force it has been following most other recessions.  The unemployed and underemployed coupled with a like number of people who fear losing their jobs might account for upwards of half the total available workforce.  The result is less consumer spending overall.

Less spending is contagious.  Even those who have not been personally impacted by the country’s financial woes and believe they are relatively safe when it comes to job security are not spending as they have in the past.  Direct payroll deposits keep cash in the bank while rising credit card rates tend to affect short-term purchases, making the buying of everyday items a less than everyday occurrence.  According to a recent Gallup poll, daily spending among baby boomers, who account for 36 percent of adults, is down nearly 35 percent from last year.

The mostly fixed income pre-boomers (those born between 1930 and 1945) usually spend less than younger consumers.  However, the economic downturn has caused their daily spending to drop by about 45 percent.  So while boomers are nervous about spending, pre-boomers are simply scared.  There are sound reasons for this concern: savings have suffered, homes are worth less, health care benefits are scheduled to be cut and inflation looms on the horizon.

The cutting-edge boomers, those 60+ and nearing retirement age, are not likely to return to their spending ways unless the economy shows vitality on all fronts.   Pre-boomers won’t be spending until the recovery is proved viable and they see their retirement savings return to, or near, previous levels.

This leaves the trailing boomers, generation X and generation Y consumers to do the spending; however, these are the same demographic groups that will be required to purchase health insurance in order to pay for those who can’t afford insurance.  In addition, faced with higher taxes – energy taxes, a national sales tax as well as increased state and local taxes — will these groups be willing to step up and start buying?  Or, have we run out of the kinds of consumers this country has depended upon to whip out their credit cards and cry, “Charge?”  

Some people contend we can spend our way out of financial trouble, although I’ve never heard of any family or business capable of making this strategy pay off.  However, there is universal agreement that no one read the TARP or energy bills before congress went to a no-discussion vote. And, the administration wants an undefined health care program passed with the same kind of speed as the other expensive bills.

Governments just don’t know how to set up financially sound programs, administer them with success, or be accountable for results.  If you doubt this sweeping statement, try to name a single problem that meets these criteria.  How about these winners: Social Security, The Postal System, and Medicare?  All of these are in deep financial trouble.

Pre-boomers, and others on fixed incomes, stand to be big losers as the result of the run-a-way spending in Washington and even closer to home.  The programs being pushed through congress will cost trillions to be paid for by future generations.  But the immediate impact will be higher taxes (many of them hidden, are costly just the same).  Goods and services will cost more thanks to higher business taxes.  And, inflation will more than likely increase significantly.

Health care reform will undoubtedly provide insurance to those who do not have it, but what about those of us born between 1930 and 1945?  Will we have to change our coverage plans, and can we expect treatment to be denied as we age as it has in other countries?  Certainly these and other questions must be answered.  The way to be sure we understand the implications of these programs is to slow things down and demand that the details be explained rather than blindly voting to move forward.  This applies to the energy bill (cap and trade), health care reform, and a second stimulus package.

If this seems reasonable to you, tell your representatives that you want them to read the bill.  Ask them to explain what the bills mean to your particular situation, including costs.  Let them know how you feel about each proposal and how their vote will influence your vote in 2010.

There’s no reason to be mean and nasty when contacting your representative, even though the person answering the phone may not be helpful, or in some instances they can be downright rude.  If these kinds of confrontations bother you write a letter or an e-mail. The purpose of the contact is to gain information, let your opinion be known, and register your agreement or disagreement with the position the elected official is taking.   Maybe this will get those who are supposed to serve you back on track; but if you don’t take action, your point-of-view will not be heard.

With so much hoopla surrounding health care reform over the summer,

we may have overlooked the fact that seniors are caught in a vice grip and the financial squeeze is being applied, which is particularly uncomfortable to folks on fixed incomes. Is it simply a coincidence that the benefits are changing in 2010, the year when all pre-boomers are going to be 65 or older, or is this an indication of a growing emphasis toward the young?

It’s been 35 years since Social Security (SS) recipients failed to receive an annual COLA increase. The SS trustees determined that inflation will be so low in 2010 that they waived increases for retirees. In fact, they project that it will remain low, meaning no increase in 2011 either. With the economy in such a state of flux, it is puzzling how such projections can be made with any confidence, but this group decided to do it anyway. Did the powers-that-be consider the reality that older Americans are faced with continued increases in health care costs and needed goods and services that represent a disproportionately higher portion of their expenses then the general population?

An obscure hold-harmless provision in the law states that if there is a zero COLA the basic Medicare Part B premium must remain the same. But there’s a loophole that applies to one in four beneficiaries (about 11 million seniors). It affects those who don’t have the premiums withheld from their SS checks, those paying a higher Part B premium based on higher income, and those newly enrolled in Part B. For them premiums will increase by nearly 25 percent next year and could continue to increase in the years ahead. How much, for how long, and will it trickle down?

Medicare Advantage is the private system preferred by 23 percent of the seniors in lieu of Medicare. The government wants to reduce payments by $100 billion over the next several years. Administration proponents claim this will reduce overpayments and subsidies to private insurance companies. Is this a step in reducing waste, fraud and abuse as we have been promised or is it another way of reducing benefits and moving health care for seniors under the direct control of the federal government?

If you haven’t been worried before, maybe the above facts will serve as a wake up call and cause you to join other pre-boomers in questioning their Washington representatives about the future for America’s new seniors. Pre-boomers are on the cutting-edge of what trailing generations can expect as they grow older. Politicians must be made aware that we won’t be shut out of the debate. Contact your elected representatives and make sure you know how they intend to address your needs in Washington. Tell them you are part of new senior voting block, accounting for about 30 percent of the ballots cast in an off year election, which will determine if they will be going back to congress in 2010.

So there’s nothing for us to do but sit back and enjoy life.  Right?  Not if you intend to live for a while and hope to enjoy it the way you expected.  Our parents got a surprise gift when they found themselves growing older and having a better quality of life than anticipated.  Pre-boomers saw this and planned accordingly for our own futures.

Now we are faced with cuts in Medicare to the tune of $500 Billion.  We have real concerns about what this will mean in terms of senior health care.  And the reforms being discussed may have a greater impact on new seniors than younger Americans, since we have a need for more care as we get older.  In addition, increased taxes and possible inflation are real concerns for those of us on fixed incomes.  That’s why we must take a look at the responsibilities we have in retirement.

Aside from being wonderful grandparents and great grandparents as well as doing the things we didn’t have time to do when we were in the workforce, today’s new seniors can make a difference in myriad ways.  We have experience.  We have time.  And, we have vitality.  These assets can be applied to help solve problems in our communities, our states, and even in Washington DC.

But don’t expect people to knock on your door and ask you to consider being of service.  It’s going to take a personal commitment and requires an effort on your part to get involved.  This may mean writing letters and making phone calls to elected officials about spending programs, not delivering on promises made, or simply letting them know what you think is needed.

Joining organizations that you believe share you values has the added benefits of being able to share the workload with others and serving as a social network as well.  New friends can broaden your outlook and bring more fun to life.  Of course, once you’re part of the team, the leaders will find lots of areas where they want you to help.  But you know what you can do and how much time you’re willing to spend, so don’t do more than you feel comfortable doing.

The must important thing is you’re in the game.  After that, only you can decide how deeply to be involved.  My experience has been that being of service is personally satisfying and can make a meaningful difference.  Take a look at how ordinary citizens changed the debate about health care reform.  That was anything but ordinary.

If we evolve into a single-source system, Christmas and Easter seals, the March of Dimes and various cancer related causes are potential casualties. Then there’s diabetes, sickle cell disease, and the fight against crippling afflictions funded by the Jerry Lewis Telethon. If everyone is on the same health care plan would these efforts be necessary? The government will fund research and treatment for all our medical needs. Right?

How about the hospitals funded and administered by special interest groups such as the Shriners Hospitals for Children, church hospitals of all religions, and other care providers that depend on private contributions such as Saint Jude’s, City of Hope and many more around the country. If we’re all under one plan, won’t we eventually have a nationwide hospital network overseen by the government’s health care czar and his/her team? That means no fund raising efforts will be required to run these institutions.

With limits being placed on charitable giving and taxes rising for the wealthiest among us, contributions will most likely be declining anyway. And for the rest of us, our disposal incomes will be shrinking for years to come as hidden taxes and inflation take their toll. For the increasing numbers of unemployed, working poor and folks on fixed incomes (like pre-boomers and older seniors), charity must begin at home.

If everyone has health insurance and medical care, individual problems will no longer be related through gut-wrenching stories that soften our hearts, and cause us to reach for our checkbooks to help the less fortunate. Instead, we will be multi-digit numbers in a health system administered under the watchful eye of the government through a universal plan that supposedly provides equal treatment for all.

Could this really happen in America? I pray not. It’s time to stop shouting at Town Hall meetings and complaining among friends and family. We pre-boomers need to say to our congressional representatives, “Stop the politics and come up with a bi-partisan plan that addresses those citizens who are uninsured, have pre-existing conditions, are out of work, need to transfer coverage to another state, or have special medical needs. Tackle these and report back to us with the results before attempting to dismantle a health care system that 85 percent of us are satisfied with. And next time, please listen rather than trying to sell us. Thank you.”