Senior Cost of Living Index proposed

Senior Cost of Living Index proposed

May 8, 2008 (Washington, DC) Seniors have lost 51 percent of their buying power since the beginning of the decade, according to a new study released today by The Senior Citizens League, one of the nation's largest nonpartisan seniors groups.
Each year, seniors receive a small increase in their Social Security checks, intended to help them keep up with the costs of inflation. But since 2000, the Social Security Cost of Living Adjustment (COLA) has increased average benefits just 24 percent while typical senior expenses have risen by 88 percent, almost four times as fast.
The study examined the increase in costs of fifteen key items between 2000 and 2008. The items were chosen because they are emblematic of the costs seniors must bear. Twelve of the fifteen costs exceeded the COLA and three jumped by triple digits. The selected items represent seven categories, weighted by approximate expenditure: housing, transportation, medical, food, recreation, communication, and apparel.

Inflation taking bite out of lifestyle

A senior with the average Social Security benefit in 2000 received $816 per month, a figure that rose to $1013.50 by 2008. However, that senior would require a Social Security benefit of $1,531.60 per month in 2008 just to maintain his or her 2000 lifestyle.
"Most Americans understand the impact higher gas and food prices are having on household budgets, but those increases are hitting seniors on fixed incomes hardest," said Daniel O'Connell, Chairman of The Senior Citizens League. "Our government is failing seniors year after year by giving them such a paltry Cost of Living Adjustment."
A 2007 analysis by The Senior Citizens League found that seniors had lost 40 percent of their buying power since 2000; this year's dramatic increase is largely a result of increasing food prices, transportation costs, and home heating oil rates.
A majority of the 37 million Americans aged 65 and over who receive a Social Security check depend on it for at least 50 percent of their total income, and one in three beneficiaries rely on it for 90 percent or more of their total income. In general, low-income seniors are most affected by the loss of buying power, since they have few other sources of income.
To help increase buying power and offset the cost of Medicare Part B, The Senior Citizens League is lobbying for a change in the Consumer Price Index (CPI) used to determine the COLA. The government currently calculates the COLA based on the CPI for Urban Wage Earners and Clerical Workers (CPI-W), a slow-rising index that tracks the spending habits of younger workers who don't spend as much of their income on health expenditures.
However, the government does track the spending patterns of older Americans, and has done so since 1983 with the CPI for Elderly Consumers, or CPI-E. By tying the annual increase in the COLA to the CPI-E, seniors would see much needed relief in their monthly checks.
For example, a senior who retired with a benefit of $460 in 1984 would have received $11,188 more over the past 24 years with the CPI-E.
TSCL supports two similar bills entitled "The Consumer Price Index for Elderly Consumers," introduced in the current Congress. H.R. 1953 was introduced by Representative Charles Gonzalez (D-TX), and H.R. 2032 was introduced by Representative Peter DeFazio (D-OR).

With 1.2 million supporters, The Senior Citizens League is one of the nation's largest nonpartisan seniors groups. 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. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.