Today’s announcement that the Social Security cost-of-living adjustment will be just 1.7% means that millions of seniors who rely on their Social Security for the basics like fuel, groceries and medical bills will once again find their expenses far outpacing their Social Security benefit. For the average senior, this COLA will mean about a $21 monthly increase, which could mean little to no increase at all once next year’s Medicare premium increases are announced.
“Seniors know all too well, their living costs often far outpace the COLA increase, yet incredibly many politicians are proposing a new formula that will erode this inflation protection even more. While they try to minimize this backdoor benefit cut, the truth is replacing the current COLA formula with the chained CPI will mean the typical 65 year-old, who filed for benefits at 62, would lose about $130 per year in benefits. By the time that senior reaches 95, the annual benefit cut will be almost $1,400, which is a 9.2 percent cut.
Given that the average senior currently receives just over $14,000 a year in Social Security, it’s hard to imagine how anyone can argue the current COLA is too generous. Yet this is exactly what is being proposed in closed door meetings on Capitol Hill and on the campaign trail nationwide. I’ve asked seniors at town hall meetings nationwide how many think the COLA is too large — laughter is always the response. Contrary to claims by those who hope to use Social Security benefits cuts as a bargaining chip in debt discussions, the Social Security COLA is clearly not too generous. Today’s announcement is even more proof of that fact.”…Max Richtman, President/CEO
The National Committee believes we should move to a COLA formula that takes a more accurate measure of seniors’ expenses, which is the CPI-E. It was developed in 1982 to reflect the different spending patterns of consumers age 62 and older. The CPI-E has reflected a rate 0.3 percentage points higher than inflation as measured under the current method.
The National Committee agrees it is critical that the COLA be calculated based on an accurate formula. But if accuracy is really the goal, Congress should adopt the CPI-E which factors in the large health care expenses most seniors face. Adopting a formula that cuts already modest benefits for generations of retirees, as does the proposed chained CPI, would be devastating for millions of middle-class Americans who can not afford this back-door benefit cut of $1,400 a year.