RAO Davao City

United States Military Retiree Activities Office Davao City, Philippines

SSA COLA 2009 8 June 2008

Posted by Service Officer on June 8th, 2008

For years seniors have been getting by on Social Security benefits with a very small Cost-of-Living-Adjustment (COLA). The Senior Citizens League (TSCL) recently released a study that puts real numbers of the loss of buying power they are facing. This study shows that, from 2000 through 2008 alone, Medicare Part B premiums have increased 112%, and that prescription drugs have increased 49%. Concurrently seniors are facing cost increases in basic groceries like milk and eggs. Meanwhile, their Social Security benefits have increased only 24%. The study shows they have lost 51% of their buying power just since 2000. Clearly, the Social Security COLA is not keeping up with inflation, which is what it was intended to do. One primary reason is that the current COLA is based on a market basket of goods typically purchased by younger wage earners, called the Consumer Price Index for Wage Earners (CPI-W). As a result, Social Security beneficiaries received a 2.3% increase in benefits for 2008.


The government does track a Consumer Price Index for Elderly Consumers (CPI-E), which takes into account the spending habits of senior citizens. That index would have increased seniors benefits by 2.6% vice 2/3% this year. While that difference sounds tiny, it means thousands of dollars in extra benefits over your retirement. The effect of a larger COLA is cumulative like compound interest. A person retiring with an average benefit of $1,055 in 2007 would receive $2,000 more in the first ten years of retirement using the CPI-E vice the CPI-W and $18,227 more over a 25-year retirement. A senior who retired with a benefit of $460 in 1984 would have received almost $11,200 more over the past 24 years if the COLA was based on the CPI-E. Legislation has been introduced by Rep. Charles Gonzalez (TX-20) that would base the Social Security COLA on the CPI-E. If signed into law the Consumer Price Index for Elderly Consumers Act (H.R.1953) would base the Social Security COLA on the CPI-E. To see if your Member of Congress is one of the 16 who so far have supported the CPI-E or request he/she do refer to http://capwiz.com/usdr/issues/alert/?alertid=11399626&queueid=[capwiz:queue_id]. Enter your zip code and complete your constitute data. If he/she is already sponsoring the bill you can send an automatic “Thank You” message. If he/she has not signed on to support the bill you can send an automatic message requesting to so. [Source: TSCL Action alert 20 May 08 ++]

Leave a Reply

You must be logged in to post a comment.