That’s because while seniors’ energy, food, and prescription drug costs have increased over the past three years, they’ve only received a Cost of Living Adjustment (COLA) for Social Security this past year. That’s because of an outdated and flawed formula for calculating COLAs that does not accurately reflect the real costs facing our nation’s seniors.
Last month, the Social Security Administration announced that seniors would get their first COLA increase in more than two years. But while seniors will finally receive a COLA in 2012, the increase is less than it should be to meet current expenses. Right now, COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). But the groups included in the CPI-W only represent about 32 percent of the U.S. population. It measures the costs of younger, employed individuals – and does not reflect seniors’ expenses, forcing them to pay rising bills with inadequate COLAs.
That’s why I recently introduced the Consumer Price Index for Elderly Consumers Act. The Act would formalize an already existing Consumer Price Index for the Elderly (CPI-E) to calculate COLAs for people who are more than 62 years of age, which would more accurately reflect the needs of today’s seniors. The CPI-E would take into account seniors’ specific consumption habits and costs of living – adjusting for health care, energy, and food costs for seniors – and then be used to determine COLAs for Social Security benefits.
The average person who retired in 1985 received a monthly benefit of approximately $887.27 under the CPI-W in 2009. Under the CPI-E, that senior would have received $954.52 – a difference of $66.25 a month or $795 over the course of a year.
Too many seniors who have worked hard and played by the rules depend on Social Security to help pay for necessities. For others, Social Security has become their sole, or majority, source of retirement income – the result of a financial crisis that wiped out retirees’ pensions, IRAs, and 401Ks.
I believe we need to reduce the deficit for our children and grandchildren. But I don’t think we should balance the budget at the expense of their parents and grandchildren. Instead of cutting Social Security, I’m fighting to reduce spending by ending tax loopholes for companies that send American jobs overseas, cancelling taxpayer-funded subsidies for big oil companies and extra breaks for wealthy investors.
We can solve America’s deficit problem without creating an even greater deficit of resources for America’s seniors.
We know that the COLA for seniors is already too low because it is based on the cost of living for a working person – if you’re seventy years old you are more likely to have higher health care costs than a 30-year old. Yet, despite the fact that Social Security does not contribute to the budget deficit, some Washington politicians want to make COLAs even smaller.
Belle witnessed the creation of Social Security in 1935 and paid into the program throughout her working life. Now, when she and so many others need Social Security the most, some politicians are threatening to make further cuts to the benefits seniors have earned and so rightly deserve. In the 1960s, President Kennedy said, “changes in our population, in our working habits, and in our standard of living require constant revisions.” He anticipated necessary improvements for senior citizens like Belle.
It’s time we ensure seniors receive the benefits they deserve – and so desperately need.
Sherrod Brown is a United States Senator from Ohio.