MYRA'S 20 CENT A MONTH RAISE

Hang on to your wallet, folks. That hand in your pocket may not be your own.

One of the slickest pickpockets out there may be your own beloved Uncle Sam, who's working a good one on many senior citizens.

The Social Security Administration just sent a letter to 80-year-old Myra proclaiming the good news: "Your Social Security benefits will increase by 3.3 percent in 2007 because of a rise in the cost of living." This makes Myra very happy (even though the cost of medicine and other things she needs seem to be going up a lot faster than 3.3 percent).

But Myra doesn't complain. Her calculator tells her that's she'll be getting $31.10 a month more than last year.

But Myra's smile doesn't last long. The rest of the letter is all downhill. "The premium you pay for Medicare Part B will increase because of a change in the law. A new Medicare law requires some people to pay a higher premium for their Medicare Part B."

Uh-oh.

The letter goes on: "...We asked the Internal Revenue Service (IRS) about your modified adjusted gross income (MAGI)."

You dirty snoops!

The letter continues: ".....your MAGI in 2005 was $118.17."

My MAGI is none of your business!

The letter instructs: "We used the following table to decide your income-related increase."

Myra hurriedly reads the table. She pales, learning that her Medicare Part B monthly increase is going to be a whopping $30.90 a month.

That's crazy!

Feeling faint, Myra begins to punch the calculator.

And that's how Myra got a magnificent 20 cent raise from Uncle Sam.

One last piece of irony:

While Social Security claimed Myra's cost of living was going up only 3.3 percent, it raised her Part B premium from $93.50 to $124.40 – an increase of 33 percent.... or ten times the cost-of-living increase.

That's why Myra and many fellow seniors believe Uncle Sam lies about inflation. He has a big economic incentive to understate the inflation that helps you, while overstating the inflation that hurts you.

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