COLA - Cost of Living Adjustment
For the first time since automatic COLAs were instituted in 1975, Social Security beneficiaries did not receive cost-of-living adjustments (COLAs) in 2010 and 2011. After lobbying for an emergency COLA, TSCL was disappointed that Congress did not enact one to help offset increases in Medicare premiums and protect the buying power of Social Security benefits.
TSCL also strongly believes that the Social Security COLA that seniors are currently receiving does not accurately reflect how they must spend their money. Our studies and surveys indicate that the current COLA is growing too slowly and does not accurately measure inflation experienced by seniors. In fact, an analysis by TSCL in 2010 found that seniors have lost 24 percent of their purchasing power since 2000. The COLA is based on a consumer price index (CPI) that reflects how young urban workers tend to spend their money. Older Americans spend a disproportionate share of their household budget on health care. Since health care costs continue to rise so quickly – and since most health care spending cannot be substituted for something cheaper – TSCL believes that seniors would be better served if their COLA was based upon a consumer price index for elderly consumers, the CPI-E.
The CPI-E regularly puts the spending inflation for seniors at two-tenths of a percentage point higher than the rate at which the consumer price index for young urban workers – the CPI-W – increases.
TSCL members and supporters believe that the CPI-E should be fully implemented and utilized for determining seniors’ Social Security COLAs each year. TSCL estimates that a senior who retired with average benefits in 1984 would have received $13,723.16 more through 2011, if the CPI-E had been used.
TSCL is very supportive of legislation such as the Consumer Price Index for Elderly Consumers Act and is hopeful that it will be introduced in the 112th Congress. TSCL also supports legislation which would protect seniors in years such as 2010 and 2011, when there is no COLA, by providing a guaranteed COLA each year. We will also fight against proposals to reform Social Security by cutting COLAs.