Tiny Cost-of-Living Adjustment in Social Security Benefits Announced for 2013

National Women’s Law Center’s analysis shows proposals to cut the COLA are a stealth benefit cut that would especially hurt women

(Washington, D.C.) The Social Security Administration announced today that the cost-of-living adjustment (COLA) for Social Security would be 1.7 percent in 2013.  The COLA is designed to prevent the value of Social Security benefits from being eroded by inflation.  Currently, the COLA is based on the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, the CPI-W.  Some Members of Congress engaged in closed-door, deficit-reduction talks are looking at a proposal to use a different Consumer Price Index, the Chained CPI, which would reduce annual COLAs and thus cut Social Security benefits. The proposal was part of the Bowles-Simpson deficit-reduction plan and the plan outlined by the so-called “Gang of Six” Senators last year.

The following is a statement by Joan Entmacher, NWLC Vice President of Family Economic Security:

“The cost-of-living increase announced today will amount to $19 per month for the typical single elderly woman whose monthly benefit is only $1,100 per month.  No one who tries to make ends meet on just their Social Security benefits – as millions of women do – would think that was too generous.

“Social Security benefits are already modest, and even the current measure of inflation doesn’t account for the higher health care costs faced by the elderly and people with disabilities.  So it’s deeply troubling that cuts to Social Security benefits are being discussed in backroom talks on Capitol Hill.

“A stealth cut to Social Security benefits that would affect current beneficiaries and particularly hurt women has been gaining traction.  It would change the way the Social Security cost-of-living adjustment is calculated by using a new measure of inflation called the Chained CPI.  Proponents have branded the new measure of inflation a mere ‘technical adjustment,’ but don’t be fooled.  It would cut the annual COLA – and the value of benefits – every year.  The cuts start small – but really add up over time.

“The Chained CPI is a longevity penalty:  the longer you live, the less you have to live on.  That’s a particular threat to women’s economic security because women tend to live longer than men, rely more on income from Social Security, and are already more likely to be poor. By age 80, under this plan, the cut for the typical single elderly woman would be equivalent to the loss of one week’s worth of food each month.  By 95, the loss would be equivalent to almost 13 days’ worth of food each month.

“Switching to the Chained CPI would cut Social Security benefits for millions of current beneficiaries:  retirees, widows and widowers, people living with disabilities, and children.  The right way to reduce the deficit is by making millionaires and corporations pay their fair share of taxes – not by cutting programs that millions of Americans depend on.” 

For more analysis from the National Women’s Law Center about the Chained CPI, visit www.nwlc.org/chainedCPI.

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