Social Security's benefits are modest by virtually any measure, but vital to the millions of seniors, people with disabilities, and survivors who rely on them. To ensure that these crucial benefits do not erode over time, the law requires that they be automatically adjusted to take into account inflation. The annual Cost-of-Living Adjustment (COLA) is not a benefit increase, but a part of the basic benefit.
On Tuesday the Social Security Administration announced that benefits would be increased next year by just 1.7 percent. The percentage increase is lower than it should be because the current COLA under-measures the inflation experienced by seniors and people with disabilities. It measures the inflation experienced by urban workers who experience lower health care costs on average than the costs experienced by seniors and people with disabilities dependent on Social Security. Indeed, many seniors and people with disabilities will effectively get no or almost no COLA because the increase will go to pay rising Medicare premiums that are generally automatically deducted from Social Security checks.
Despite the fact that the current COLA is too small to offset inflation, some powerful members of Congress are nevertheless quietly discussing cutting Social Security benefits by implementing an even less accurate and less generous measure of inflation: the chained-CPI. The new measure, if adopted, would diminish the purchasing power of current and future seniors. At a time when millions of Americans lack a secure retirement, and future generations are likely to be even more dependent on Social Security, it is more important than ever to protect Social Security's basic benefits by having a truly accurate COLA, not one that cuts the purchasing power of benefits over time.