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Time to adjust Social Security COLA
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Congress is looking at changing the cost of living adjustment to Social Security.
There is no cost of living adjustment coming next year for Social Security recipients.
How the COLA is determined is important, not only for current recipients, but for the millions of Baby Boomers who are signing up for the Social Security benefits at a rate of 10,000 a day for the next 20 years.
With that in mind, it's time to adjust how the government measures inflation as it applies to COLA.
According to the government, there was no inflation and therefore no need to adjust Social Security benefits in 2010.
But the method the government uses to measure inflation is out of touch with the day to day lives of Americans.
The Consumer Price Index is the current measuring stick. It is determined by measuring the price of a standard group of goods meant to represent the typical market basket of a typical consumer.
For more information, go to the Social Security Administration's COLA page.
But the cost of living, as everyone knows, goes far beyond what we buy at the market. It includes the price of the gas we put in the car, the cost of the energy to heat our homes, the bills we pay at the doctor's office or hospital or pharmacy,and the interest on our credit cards.
The cost of all of it continues to creep up.
It's a flawed measurement when the government determines that 'costs' haven't gone up to warrant a cost of living increase for those Americans 62 and older who are getting Social Security.
There is talk on Capitol Hill of providing each Social Security recipient with $250 in lieu of COLA.
But the $250 is a paltry stopgap in lieu of much needed change to the system.
Members of Congress are getting behind legislation sponsored by U.S. Rep. Charles Gonzalez, D-Texas, to reform the cost of living adjustment formula.
New Hampshire congressman, Paul Hodes, a Democrat, signed on this week as a co-sponsor.
He said seniors "deserve their full social security benefits, particularly during these difficult economic times. With retirement accounts under tremendous pressure and health care costs on the rise, seniors are seeing a net reduction in their income. This is unacceptable, and I am committed to working with President Obama and members of both parties to solve this problem immediately.”
He agrees that the CPI does not accurately reflect the everyday expenses that senior citizens encounter.
He has signed on as a co-sponsor of the Consumer Price Index for Elderly Consumers Act, which would peg Social Security benefits to a formula specifically for older Americans that more accurately reflects their everyday expenses. This would ensure that social security benefits’ buying power does not decrease when seniors’ expenses are on the rise.
For more information:
H.R. 2429: Consumer Price Index for Elderly Consumers Act of 2009
Related story:
Baby Boomers grabbing Social Security
CBS News report on Social Security COLA
