December 21, 2012
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While negotiations between President Barack Obama and House Speaker John Boehner remain stalled, disturbing media reports indicate an option on the table changing the federal statistical formula used to calculate Social Security Cost-of-Living Adjustment (COLA). “This would lower Social Security benefits for millions of seniors. Social Security did not cause our federal deficit, and retirees should not pay the price for more tax breaks for millionaires,” said Alliance President Barbara J. Easterling.
Known in policy circles as the “chained CPI,” the policy change would mean that an average earner retiring in 2011 at age 65 would lose over $6,000 over 15 years. The change assumes that a lower COLA is acceptable because consumers could substitute cheaper products when prices go up. Health care costs, however, consume a large amount of seniors’ income. These costs cannot simply be substituted with a cheaper version. For example, a senior cannot save money by opting for a double bypass surgery instead of a triple bypass. Share an Alliance fact sheet on the “chained CPI” – http://bit.ly/Zm31wV.