October 30, 2013
Social Security to Give Small 1.5% Increase in 2014
For Immediate Release
Some want the chained CPI, which would mean even smaller increases
Washington, DC – The year 2014 will bring another small raise for millions of people in earned Social Security, veterans’ and federal pension benefits. Next year’s cost-of -living adjustment (COLA) increase will be 1.5%, the U.S. Department of Labor and the Social Security Administration announced today. The increase is based on the current CPI (Consumer Price Index) calculation, calibrated specifically for working Americans. Several proposals exist to change this formula – for the better and the worse. The “chained CPI,” which would lower future increases, was proposed by the 2011 deficit commission, included in the President’s budget proposal and included in the Republican Study Committee budget proposal in the House.
Just this month, 51 Republican members of the House, led by Rep. Reid Ribble (R-WI) signed a letter to Speaker Boehner supporting COLA cuts. On the other hand, S. 567 sponsored by Sen. Tom Harkin (D-IA) and HR 3118 sponsored by Rep. Linda Sanchez (D-CA) would help seniors by switching to the CPI-E: a formula that takes into account the items on which seniors typically spend their money.
“I hope this news about next year’s Social Security COLA will cause politicians in Washington to reconsider their support for the chained CPI,” said Edward F. Coyle, Executive Director of the Alliance. “How can anyone look at an increase of around 1.5% and think ‘That’s too big?’ Clearly, these politicians need to spend more time talking to seniors who are struggling.”
“Next year’s increase will be 1.5%. Imagine if it were even less,” added Mr. Coyle. “Then imagine if that smaller increase were to be compounded over time. That is the chained CPI.”
A study showed that, if the chained CPI were to take effect, a worker retiring this year at age 65 would lose more than $6,000 in benefits by age 80 (http://tinyurl.com/kxywnow). In 2013, the increase was 1.7 percent. There was no COLA in 2010 or 2011 because inflation was too low.
“Retirees spend those increases in our communities,” said Coyle. “Everyone benefits from a generous COLA formula. That’s why the Alliance supports the Harkin/Sanchez legislation that would improve the formula for seniors as well as improve Social Security’s solvency. It would lift the cap on earnings subject to FICA, so that all Americans pay the same rate. We need a better COLA formula, not a worse one.”
Contact: David Blank – 202/637-5275 or email@example.com