People who receive Social Security benefits overwhelmingly think the federal government is manipulating consumer price index (CPI) data, according to a new poll by The Senior Citizens League (TSCL). When asked, “Do you believe the government is manipulating the CPI to cut spending on cost of living adjustments (COLAs)?” — 98 percent of respondents said “yes.” “This should concern our new Congress,” says TSCL chairman, Ed Cates. “Both Members of Congress and the White House have discussed COLA cuts as a leading option to fix the long-term financing of Social Security,” Cates says. “Yet retirees don’t believe they are getting a fair COLA as it is now.”
Benefits of more than 55 million Social Security recipients are adjusted each year to account for increases in the cost of living. The federal government uses the percentage of increase in the Consumer Price Index for Workers (CPI-W) to calculate the increase. But beneficiaries frequently say that the annual boost in benefits is doing a poor job in keeping up with growing costs. With average Social Security benefits around $1,200 per month, retirees are getting squeezed. Most must either spend their savings more rapidly, or go into debt when costs rise more quickly than benefits.
“TSCL research suggests that the numerous changes in the way the government measures inflation is undoubtedly a major factor in the slowing of benefit growth that has occurred over the past 14 years,” Cates says. An annual study by TSCL has found that Social Security benefits have lost about 31 percent of buying power since 2000. More changes to CPI methodology become effective this month, according to the Bureau of Labor Statics.
TSCL believes that the COLA as currently calculated is not fairly accounting for the way that Social Security beneficiaries must spend their incomes. “TSCL is highly concerned that further attempts to cut COLA, or reduce the measured rate of inflation will further erode the buying power of older Americans,” Cates says. TSCL supports legislation that would provide a more fair an adequate COLA by guaranteeing that the COLA would be no less than 3% minimum, or by calculating it using the Consumer Price Index for the Elderly (CPI-E).
What do you think? Take TSCL’s 2015 Senior Survey. Visit http://www.SeniorsLeague.org.