October 22, 2014
Today’s announcement that the Social Security cost-of-living adjustment (COLA) will be just 1.7% means that millions of seniors who rely on their Social Security to get by will once again find their expenses outpacing their Social Security benefit. For the average senior, this COLA will mean about a $20 monthly increase.
“For the fifth time in six years the annual cost of living adjustment will be at an historically low level. Over this time, under the current formula, seniors have consistently received less than 2% in COLA increases with two years of zero COLA’s even though their expenses continue to rise beyond that rate. Seniors across this nation understand how important having an accurate measure of their real costs is to their day-to-day survival. While there has been a lot of talk in Washington about the need to find a more accurate COLA formula; unfortunately, that attention has largely focused on ways to cut the COLA even further. If accurate inflation protection for seniors is truly our goal, Congress needs to adopt a fully developed CPI for the elderly (CPI-E).”…Max Richtman, NCPSSM President/CEO
While inflation overall is low, for seniors who spend a larger percentage of their income on health care, the current COLA formula doesn’t tell the whole story. The typical person on Medicare pays about $4,700 out of pocket in premiums, cost sharing for Medicare-covered benefits, and costs for services not covered by Medicare. Seniors spend 14% of their budget on health expenses which is nearly three times the share of spending in non-Medicare households. The Affordable Care Act has made real progress is reducing the rate of increase in health care costs, including keeping the Medicare premium flat once again next year; however, health care costs for seniors continue to eat up a large percentage of their income.
The experimental CPI-E was developed in 1987 to reflect the different spending patterns of consumers age 62 and older. This formula acknowledges that health costs represent a much larger percentage of seniors’ monthly spending than is the case with other demographic groups. A fully developed CPI-E would more accurately measure the real-world expenses retirees’ face than the current COLA formula and would be far more accurate than the proposed Chained CPI which would cut projected benefits over time.
The National Committee and its millions of members and supporters nationwide believe it’s time Congress adopt a COLA formula which would offer inflation protection that accurately represents the expenses seniors face each year.
The National Committee, a nonprofit, nonpartisan organization acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the Board of Directors and professional staff. The work of the National Committee is directed toward developing better-informed citizens and voters.
Media Inquiries to:
Pamela Causey 202-216-8378/202-236-2123
Kim Wright 202-216-8414 www.ncpssm.org