Do the right thing: Fix the COLA for seniors
By Thair Phillips, president and CEO, RetireSafe - 01/10/12
While many Americans resolve to lose weight, quit smoking, and save more money in 2012; the United States Congress can resolve to take a fairly simple action that will correct a longstanding wrong and finally address a problem that impacts nearly 55 million older Americans. That problem is the flawed Consumer Price Index (CPI) used to set the annual Social Security Cost-of-Living Adjustment (COLA) that beneficiaries (and military retirees) depend on to save them from the ravages of inflation. The solution is H.R. 1086, the CPI for Seniors Act cosponsored by Representatives John “Jimmy” Duncan, Jr. (R-TN) and Dan Lipinski (D-IL), along with a bipartisan group of their House colleagues. Why is passage of the CPI for Seniors Act a must?
· It starts with the Bureau of Labor Statistics (BLS) formula used now to measure price increases and set the Social Security COLA. BLS uses the CPI-W index, the Consumer Price Index for Urban Wage Earners and Clerical Workers, hardly a correct measure of price inflation for older Americans struggling with higher health care costs as they age, plus increasing costs for basic needs like food, gasoline, heating fuel, clothing, and rent. While some costs have pulled back recently, they remain higher on a year-over-year basis.
Also, while many of these prices are volatile, characterized as “headline” inflation, there can be no argument that seniors have faced tremendous price spikes since 2009, the last year they got a COLA increase. Clearly long-term commodity price trends are up. For example, a 2012 soybean shortage and higher food prices are projected; and some predict crude oil closing the year 18 percent higher, pushing gasoline prices up. These, plus ever-increasing health care costs, hit fixed-income seniors the hardest. We must fix the flawed CPI for our seniors with a CPI just for older Americans, one that will finally provide an accurate, ongoing, and fair measure of senior cost inflation. That is why the CPI for Seniors Act must be enacted.
But wait, as they say in the TV ads, didn’t a 3.6 percent Social Security COLA just take effect in January, 2012? Clearly a “catch-up COLA,” after two years with no COLA, this COLA will be worth just $43 each month to the average retired worker on Social Security, increasing their check to just $1,229 per month. The annual COLA increase total for 2012 will be $516 for the average beneficiary. By adding 2012 to the previous 24 months, you get a clearer picture of what seniors actually got thanks to the flawed CPI — $516 total increase over 36 months, or just over fourteen dollars a month more. This is not an issue of “greedy” seniors as some suggest, but rather one about older Americans and military retirees who have earned and deserve fairness and accuracy. Resolved, before Congress reforms anything, they must fix the broken CPI and provide seniors with a fair and accurate COLA each and every year!
- Do the right thing: Fix the COLA for seniors (thehill.com)
- Social Security: seniors to see COLA increase in 2012 (csmonitor.com)
- Why is the Social Security Hike Seen as Bad News? (money.usnews.com)
- Social Security Benefits Will Rise (time.com)
- Social Security checks to increase (seattletimes.nwsource.com)
- Society Security COLA 2012: First Cost of Living Adjustments in Two Years (ibtimes.com)
- Social Security COLA Increase Coming In 2012 (huffingtonpost.com)
- Social Security recipients to get 3.6 percent COLA (boston.com)
- For Seniors, There Are No Small Benefit Cuts (money.usnews.com)
- Irwin Kellner: COLA is much ado about nothing (marketwatch.com)