Increase Woefully Insufficient; Seniors Have Lost Almost One-Third of Their Buying Power Since 2000
WASHINGTON, Oct. 19, 2011 /PRNewswire-USNewswire/ -- The Social Security Administration announced this morning that seniors will receive a 3.6 percent increase in their checks beginning in January 2012.
That increase represents the first time seniors will see a bump in their checks in three years. For the past two years, seniors received no COLA – the first time that has happened since the introduction of the automatic Cost of Living Adjustment (COLA) in 1975.
Seniors have continued to lose buying power over the last decade, a result of shrinking COLAs and increasing expenses that have outpaced the COLA. A study released by The Senior Citizens League earlier this year found that seniors have lost 32 percent of their buying power since 2000.
"Although a 3.6 percent COLA increase might sound impressive on paper, it neglects the sad truth that seniors have lost almost one-third of their buying power since 2000," said Larry Hyland, chairman of The Senior Citizens League (TSCL). "As millions of seniors know too well, this increase is little more than a small band aid on top of an ever-expanding wound."
Making matters worse, a Congressional deficit reduction "super committee" has been tasked with finding $1.2 trillion in cuts – and they are considering a plan to shrink future Social Security COLAs even further. The cuts would come by changing the index used to determine the annual COLA.
The current index, the Consumer Price Index for Workers (CPI-W), is a fairer and more adequate measure of inflation than the chained CPI, but the super committee is considering replacing it with the more slowly-growing chained CPI anyway. Since the chained CPI is sometimes significantly lower than the CPI-W, it would result in smaller checks for seniors.
As an example, next year's increase of 3.6 percent was calculated using the CPI-W; it would be just 2.7 percent if the government used the chained CPI. TSCL recently released a study that found that the chained CPI would cut the growth in average benefits of $1,100 today by $18,634 over the course of a 25-year retirement.
"Congress will try to sell any future cuts by saying they're tiny – but they add up to thousands of dollars over the course of a retirement," said Shannon Benton, TSCL Executive Director. "We oppose any changes to the index used to calculate the Social Security COLA, which are nothing less than backdoor attempts to slash checks."
With 1.2 million supporters, The Senior Citizens League is one of the nation's largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.
SOURCE The Senior Citizens League