By U.S. Senator Sherrod Brown (OH)
While many of you received your first cost-of-living adjustment (COLA) for Social Security in more than two years, I understand the increase is less than it should be – and how it doesn’t keep up with rising costs of prescription drugs, food, and energy. That’s because while you spent more money on energy, food, and prescription drug costs over the past three years, you only received a COLA for one year, and in many cases, it hasn’t kept pace with your monthly costs. That’s because an outdated and flawed formula for calculating COLAs does not accurately reflect the real costs facing our nation’s retirees.
Right now, the government determines whether or not to grant a COLA based on whether costs have risen, fallen, or remained stagnant for younger, employed individuals – as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). But the groups included in the CPI-W only represent about 32 percent of the U.S. population. We know that the COLA for seniors is already too low because it is based on the cost of living for a working person – if you’re seventy years old you’re more likely to have higher healthcare costs than a 30-year old.
That’s why I introduced the Consumer Price Index for Elderly Consumers Act. My proposal would utilize an already existing Consumer Price Index for the Elderly (CPI-E) to calculate COLAs for people who are more than 62 years of age, which would more accurately reflect the needs of today’s seniors. The CPI-E would take into account seniors’ spending habits and costs of living – adjusting for healthcare, energy, and food costs for seniors – to determine COLAs for Social Security benefits.
The average person who retired in 1985 received a monthly benefit of approximately $887.27 under the CPI-W in 2009. Under the CPI-E, that same senior would have received $954.52 – a difference of $66.25 a month or $795 over the course of a year. Seniors on Social Security aren't getting rich. The median benefit received by a retired worker is about $14,400 annually. According to Social Security, almost two out of three seniors rely on Social Security for half or more of their income.
It's time we honor our promise to American seniors by ensuring that Social Security works for them. We have to do a better job of making sure seniors have the resources needed to live out their twilight years with dignity. Improving the formula for the COLA would be a step in the right direction: making sure seniors can afford rising costs. Seniors have earned Social Security benefits. That's why I won’t stop fighting for Ohio seniors to get the resources they’ve worked for throughout their lives.