TSCL Expects COLA Will Be About 1.4%
Cost–of–living adjustments (COLAs) are falling to anemic lows again in 2013. Seniors and the disabled will learn the 2013 increase on October 16, 2012, but TSCL expects the increase will be about 1.1%. That would raise the average monthly benefit $15.80 from $1,126 to $1,141.80 – hardly enough to offset big expected spikes in food costs which are rising twice as fast. The rapid increase in home heating fuels and prescription drug costs also outstrips the COLA as well.
TSCL is also highly concerned that the candidates are not talking enough about protecting the annual COLA from cuts. During the recent 2011 debt limit talks with House Speaker John Boehner (OH), President Obama floated a debt reduction plan that would have reduced government spending annual increase by using the chained Consumer Price Index (CPI) to calculate the COLA.
"The switch looks deceptively small on paper," says TSCL's Executive Director Shannon Benton. "But it would have a big impact on Social Security income," she says.
According to most projections the change would cut benefits by about 7% over 25 years for current beneficiaries. But that estimate doesn't include the full cost of the cut for new retirees. Baby Boomers who have not yet turned age 60 would be hit particularly hard because the COLA is used in the Social Security benefit formula to adjust average monthly earnings once a person turns 60. The adjustment is automatically applied even if people haven't yet filed a claim for benefits. The COLA adjustments along with a delayed benefit credit helps to boost initial benefits of people who delay benefits and work longer.
TSCL is continuing to meet with lawmakers and deliver your petitions calling for a fair COLA. To send an email to your member of Congress now!
Sources: CPI Data Through August 2012, Bureau of Labor Statistics, September 14, 2012. Social Security Monthly Statistical Snapshot, Social Security Administration, July, 2012.