The Social Security Administration announced an increase of 1.7 percent to the Cost of Living Adjustment (COLA) for 2013 on Oct. 16. Though the increase is amongst the lowest ever, B’nai B’rith is pleased to see any rise at all after the COLA was unmoved in 2010 and 2011 (there was a modest increase in 2012), yielding no hike in monthly Social Security payments.
The increase in COLA will only result in about $20 more for the average senior per month and is a reminder that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), on which the COLA is based, is not an accurate reflection of senior spending. Seniors spend almost exclusively on housing, utilities, food and health care, in sharp contrast to the urban worker’s spending habits on which this measure is based.
This minor increase serves as a reminder of how easily the current formula can be outpaced by real increases in Medicare premiums and other out-of-pocket Medicare costs. It also shows how devastating the proposed switch to using Chained Consumer Price Index (C-CPI) to calculate COLA--as a means to reduce the federal deficit, rather than to accurately reflect the costs seniors face--would be for the financial security of the nation’s seniors. C-CPI operates on the theory that when the prices in goods increase, consumers find cheaper goods to substitute. Because so much of senior spending is for things like health care, which cannot be swapped out like electronics or cable service, the C-CPI is an even less accurate measure for seniors than the current one.
As an advocate for seniors, B’nai B’rith does not support deficit cutting efforts that target the elderly.