If you are of retirement age or approaching it, hopefully you have been getting a lot of information from groups like AARP, The Alliance for Retired Americans (ARA) and perhaps others about the Chained CPI. Chances are if you are under 50, you probably don’t even know what the chained CPI is, but you really need to know all about it and be afraid, be very afraid!
The chained CPI is a formula being proposed for calculating cost of living adjustments (COLA) for Social Security recipients. Those of you under 50 need to be aware that if adopted, you will be negatively affected, and the time to do something about it is now. The chained CPI assumes that consumers substitute cheaper products when prices go up. Health care costs, however, consume a large amount of seniors’ income. These costs cannot simply be substituted with a cheaper version. A senior cannot just substitute triple bypass surgery with a double because it is cheaper. Seniors also typically have more prescription drug costs as well as other health-related expenses that the younger general populace does not have.
The chained CPI would be an immediate cut for present retirees on Social Security, but those of you who are under 50 are being especially targeted by those who would love to balance the budget on the backs of retirees to retain big tax breaks for the wealthy. An average earner retiring in 2013 at 65 would lose over $6,000 over 15 years if the chained CPI were adopted. Those who would cut Social Security in the name of balancing the budget are really trying to hammer future retirees, and those under 50 need to join the fight to preserve Social Security.
There is hope. Many organizations, including the Nebraska ARA, have joined together in this battle. Sen. Harkin (D-IA) has introduced S 2252 that would require establishment of a price index that accurately reflects costs for Social Security beneficiaries. It is called the CPI-E, E for elderly. There is a companion bill in the House, HR 5727.
The real bottom line is that chained CPI or any other cut to Social Security is unnecessary. Social Security is self-sustaining, unlike other parts of the budget, and with minor adjustments can be made healthy for decades to come, but we must not allow retirees to bear the brunt of deficit reduction at a time when large corporations like Exxon-Mobil, Facebook and GE pay NO federal income tax.
On July 2 the Nebraska Alliance for Retired Americans, in conjunction with the AFL-CIO, will be part of a nationwide day of action to protest against the chained CPI. We will form a human chain at the federal building in Lincoln, Neb., from 5:00 p.m. to 6:30 p.m. All citizens, whether fast-approaching retirement or hoping for a secure one in the future, need to join together in this fight, and being at the July 2 event is one step toward a secure future for us all.
More information can be found online, including www.aarp.org/work/social-security/info-10-2012/proposed-changes-to-cola-insight-AARP-ppi-econ-sec.html.