Mary Johnson, Editor
Ninety-seven percent of seniors say that their monthly Social Security benefits rose by less than $39 in 2013, but only 11% say their monthly expenses rose by less than that. According to TSCL's newly released 2013 Senior Survey, 89% of those surveyed report that their monthly expenses rose by more than $39 and a majority, 40%, say that their monthly expenses rose by more than $119 in 2012.
Seniors and disabled adults are digging deeper into savings (if they have any) to meet day-to-day expenses. In fact, median annual expenditures for people over 65 are about $26,486 – almost twice the average Social Security benefit of $13,860.
In his address presenting his 2014 budget, President Obama said that his budget "replaces the foolish, across-the-board spending cuts that are already hurting our economy." As an example, he then cited the seniors who are losing Meals on Wheels.
Obama went on to say, "That's why my budget replaces these cuts with smarter ones." What are those "smarter cuts"? Obama's 2014 budget would cut COLAs by switching to a more slowly-growing "chained" consumer price index (CPI) to calculate the annual boost.
Some lawmakers who favor the change claim that it's a more accurate gauge of inflation because the current CPI doesn't reflect how people substitute when items go up in price. But if accuracy is really the goal, then why doesn't the government use an index that better accounts for senior costs, like healthcare which is rising several times faster than overall inflation?
The automatic budget cuts known as "sequester" may cut Meals on Wheels by 4 to 19 million meals this year. But a COLA cut that starts in 2015 isn’t going to fund 19 million meals for seniors in 2013. It could mean, however, that more seniors will be forced to depend on Meals on Wheels in the future, because they won’t be able to afford grocery costs.
And while the attention has been on people who already receive benefits, chaining the COLA would also affect Baby Boomers like me who haven't even retired yet. The Social Security Administration applies the COLA in the benefit formula starting at age 62 to help keep the initial benefit adjusted for inflation until benefits are claimed. Chaining the COLA in 2015 would cut my initial monthly retirement benefit (which is about average) by about $30 by age 70.
How much would chaining the COLA cost you over time? TSCL has developed a new online COLA calculator.
Sources: 2013 Senior Survey, TSCL, April 2013.
