The annual Social Security cost-of-living adjustment (COLA) is critically important to the financial security of the nearly 58 million Americans receiving benefits. By providing protection against inflation, the COLA helps beneficiaries of all ages maintain their standard of living, keeping many from falling into poverty. The COLA announced today is vital to millions, but at an average of just $19 per month, it will quickly be consumed by the rising costs of basic needs such as food, utilities and health care.
Some in Washington, though, would make this small COLA even smaller by including the Chained CPI in a budget deal. The Chained CPI would further lower the COLA for Social Security and veterans benefits with cuts that would start now and grow larger every year. Under Chained CPI, the modest 1.5 percent COLA announced today would be reduced, putting increasing strain on millions of beneficiaries struggling to keep up with expenses.
Shrinking the COLA could also negatively impact our still-fragile national economy, since every dollar of Social Security benefits generates about two dollars of economic activity. Recent research by the AARP Public Policy Institute calculated that spending of Social Security benefits added about $1.4 trillion in total economic output to the U.S. economy in 2012.
We know that any adjustments Washington makes to Social Security will have a profound effect on individuals of all ages, businesses and our economy as a whole. That’s why AARP is fighting the Chained CPI and calling for a national conversation about the future of Social Security – so those who paid into the system can have a voice in the debate and so current and future generations get the benefits they’ve earned.
Additional resources on the Chained CPI, including a calculator showing how individual benefits would be impacted by the Chained CPI, are at www.earnedasay.org.
Also of Interest
- Best-Kept Secret: Wait Until Age 70 to Take Social Security
- Social Security Calculator Shows When to Claim Your Benefits
- Shopping for health insurance? The health insurance marketplace is now open
- Join AARP: Savings, resources and news for your well-being
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