Friday, 01 November 2013
Social Security COLA Increase: 1.5% - Whoopdedoo!
On Wednesday, it was announced that the Social Security cost-of-living adjustment (COLA) for 2014 will be 1.5 percent. With the average benefit at around $14,000 per year, that means about $19 more per month for the average elder.
Don't spend it all in one place.
The small good news (gee, thanks) is that the Medicare Part B premium which is deducted from Social Security checks, will remain the same for most elders at $104.90 per month. There have been years in the past when the increase in that premium was larger than the COLA for the year.
Let me repeat that 2014 increase: 1.5 percent. Just this week I was notified that the premium for my Medicare Supplemental (Medigap) policy is increasing by 7.74 percent. Increases in other fixed expenses for next year will soon be forthcoming although I don't yet know hard numbers.
As Huffpost helpfully explains,
”By law, the cost-of-living adjustment is based on the consumer price index for urban wage earners and clerical workers...
“The COLA is calculated by comparing consumer prices in July, August and September each year to prices in the same three months from the previous year. If prices go up over the course of the year, benefits go up.”
Unfortunately for old people, the urban price index undercounts or does not measure the different kinds of expenses people who are retired have resulting in a gradual erosion of Social Security income such as I am experiencing (again) this year - and I'm pretty sure that's happening to many of you too.
Nevertheless, President Barack Obama, many Congressional Republicans and some Democratic legislators want to change the COLA calculation to a measurement of inflation called chained CPI that further reduces the annual COLA.
”Believe it or not, the 'chained CPI' is based on the theory that COLAs are 'too generous' - despite the fact that, in recent years, COLAs have been negligible or even non-existent...
“Further, not only would enacting a chained-CPI be harmful to senior citizens, it would also make substantial cuts to the VA benefits of more than 3.2 million veterans.
“Veterans who started receiving VA disability benefits at age 30 would have their benefits reduced by $1,425 at age 45, $2,341 at age 55 and $3,231 at age 65.”
As you know, the Congressional agreement that stopped the government shutdown after 16 days funds the federal government only until 15 January 2014.
Senator Sanders has been appointed to a 29-member Congressional conference committee (seven senators, 22 representatives) tasked with coming up with a budget to prevent another shutdown in January.
That committee met for the first time earlier this week and their deadline for a budget is 13 December. It is not unlikely that chained CPI will become a pawn in these negotiations.
The committee is chaired by Senate Budget Committee Chairwoman Patty Murray, [D-WA], and House Budget Committee Chairman Paul Ryan, [R-WI]. Yesterday, the Wall Street Journal published a guide to the eight committee members to watch most closely during their negotiations and had this to say about Sanders' role on the committee:
”An independent caucusing with Democrats, he’s been very critical of White House proposals to cut Social Security and Medicare benefits. If liberals want a squeaky wheel on the conference committee, Mr. Sanders can play that role.
“He could provide cover for Democrats if they don’t want to negotiate, but he won’t look the other way if he feels like Democrats are giving anything away to the GOP.”
Personally, I don't have much hope for the committee; historically, little has ever come out of any bipartisan Congressional committee and this one has just six weeks to perform.
Maybe the most we can expect is that Senator Sanders, who is the number one D.C. legislator reliably committed to representing elder issues, can hold the line for us against chained CPI. Here he is speaking earlier this week at a conference on Social Security:
How about taking a couple of minutes to tell Senator Sanders that you support and appreciate his hard work for elders. You can do that here.
At The Elder Storytelling Place today, U.R. Israel: The Atom Bomb Club