Does The Social Security COLA Overpay Seniors? Deficit Cutters Say COLAs Need A "Trim"

Does The Social Security COLA Overpay Seniors? Deficit Cutters Say COLAs Need A “Trim”

Alexandria, VA (June 14, 2011) Cost-of-living-adjustments (COLAs) are "overpaying" Social Security recipients, and the government needs to switch to an "improved" method of measuring inflation that will give them a "small trim". That's what deficit negotiators from both sides of the aisle are saying in making the case for the government to switch to a more slowly-growing Consumer Price Index (CPI) for calculating the annual Social Security boost.

But it's no "small change," warns The Senior Citizens League (TSCL), one of the nation's largest nonpartisan seniors groups. In fact, it could reduce lifetime Social Security benefits by tens of thousands of dollars over a retirement.

"If Congress adopts the more slowly-growing ?chained? CPI to calculate COLAs, that would cut the growth in average benefits, about $1,100 per month today, by about $13,742 over a 25-year retirement," states Larry Hyland, Chairman of TSCL. The benefit reductions compound over time, hitting the oldest the hardest. "By the time age 62 retirees with average benefits today reach age 84, their monthly benefits would be about $118 lower than they would receive using the current COLA methodology," Hyland says.

COLAs are intended to protect the buying power of Social Security benefits against rising inflation. A new study recently released by TSCL found, however, that the CPI used to calculate COLAs today only does an anemic job of protecting benefits as it is. Since 2000, the COLA has increased just 31 percent, while typical seniors' expenses jumped 73 percent, more than twice as fast.

"It's outrageous to say that COLAs overpay seniors and the disabled," Hyland says. "To the contrary, COLAs already grow too slowly to provide the protection to Social Security benefits they're intended to," he points out.

The majority of seniors aged 65 who get Social Security depend on it for at least 50 percent of their income. Average benefits today only total about $13,200 a year.

"Switching to a more slowly growing CPI is not the only change affecting seniors that deficit negotiators are looking at," notes Hyland. "Members of Congress from both parties are already considering changes that would make seniors pay a bigger share of their Medicare, and reducing government Medicaid payments at the same time," he adds.

The savings to the government for switching to the more slowly-growing CPI compound over time, and are substantial. The Congressional Budget Office estimates that the change would cut COLAs by $112 billion from 2012 - 2021 alone and, if used in other federal retirement programs and for indexing taxes as well, would reduce deficits by about $300 billion over the next decade, including reduced interest on the debt.

TSCL is gearing up to fight legislation that would cut the current rate of COLA growth. "People who depend on Social Security need a COLA that more adequately protects the buying power of their benefits," says Hyland. TSCL believes seniors would receive higher and more adequate benefits by using an index that more closely tracks senior spending, like the Consumer Price Index for the Elderly (CPI-E). TSCL supports The Consumer Price Index for Elderly Consumers (CPI-E) Act, H.R. 798 introduced by Rep. Peter DeFazio (OR-4), and H.R.456 introduced by Charles Gonzalez (TX-20). Learn more by visiting TSCL on the web at


With over 1 million supporters, The Senior Citizens League is one of the nation's largest nonpartisan seniors groups. Located just outside Washington, D.C., its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for.