New AARP Analysis Shows Empire State Vets Stand to Lose $322 Million in Benefits Over Next 10 Years
NEW YORK, Feb. 26, 2013 /PRNewswire-USNewswire/ -- As younger veterans struggle in the job market, lawmakers in Washington are considering a proposal that will take a harsh and unsuspecting toll on them at the other end of the spectrum, in their retirement. With the March 1st sequestration deadline looming, the debt debate is heating up, and that could hold bad news for New York's nearly 1 million veterans. Under a proposal called a Chained CPI, the group stands to lose roughly $322 million in retirement benefits in New York alone – the move is strongly opposed by AARP.
For veterans ages 18-24, the unemployment rate was over 20%, and in the double digits for those 25-34, according to the Bureau of Labor Statistics. AARP says it's these kinds of harsh economic conditions that make a veteran's earned retirement benefits all the more important. A Chained CPI would devastate those benefits; delivering $17 billion in cuts nationally. The proposal would also cut Social Security benefits by about $129 billion, with New York's beneficiaries seeing over $7 billion in cuts.
"Many veterans in New York have already faced battle in the line of duty, they should not be forced to face another one, a financial battle, in their retirement due to their hard earned benefits being cut under a shortsighted, stealth move like the Chained CPI," said Beth Finkel, State Director for AARP in New York State. "A revision to the cost of living adjustments under a Chained CPI is being sold as no big deal. The fact is its adoption would take billions out of the pockets of current and near retirees, veterans, working families and the disabled in New York, as well as our state economy, in the next ten years alone."
"Under a Chained CPI, billions in cuts – would come from VA benefits, civilian pensions, and military retirement pay," said Thomas J. Berger, Ph.D., Executive Director, Veterans Health Council, Vietnam Veterans of America. "For many New York veterans, reducing the annual COLA would mean real sacrifice. We ask that Congress not do that for those who have already sacrificed so much for this great country."
A Chained CPI (consumer price index) contains changes to the formula used to determine the Cost of Living Adjustment (COLA) for veterans and Social Security beneficiaries with a twist, assuming that when prices for one thing goes up, people settle for cheaper substitutes (for example, if beef prices go up, they'll buy chicken).
The "substitution" theory under a Chained CPI is inaccurate as most seniors can't simply trade down in their spending on prescription drugs, utilities and other fixed expenses. A COLA formula under Chained CPI would mean lower COLAs, compounding over a person's lifetime.
"Older New Yorkers are already making trade-offs to make ends meet, they can't simply trade down their expenses as the flawed Chained CPI approach supposes," added Finkel. "These benefits will be even more important to future generations, due to stagnating income, escalating personal debt and rising costs for education and health care – we're urging New York's Members of Congress to oppose the Chained CPI."
New York State has over 950,000 veterans, receiving roughly $2.5 billion in military retiree benefits. Additionally, 2.4 million seniors currently receive Social Security for an average annual benefit of $14,600. Social Security makes up about 58% of the typical older New Yorker's income, lifting 32% out of poverty.
AARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment security and retirement planning. We advocate for consumers in the marketplace by selecting products and services of high quality and value to carry the AARP name as well as help our members obtain discounts on a wide range of products, travel, and services. A trusted source for lifestyle tips, news and educational information, AARP produces AARP The Magazine, the world's largest circulation magazine; AARP Bulletin; www.aarp.org; AARP TV & Radio; AARP Books; and AARP VIVA, a bilingual news source. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. The AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at www.aarp.org.
SOURCE AARP New York State