As part of deficit-reduction negotiations, some policy makers have proposed switching to the chained consumer price index (CPI) to calculate the cost-of-living adjustment (COLA) for Social Security and other programs. The chained CPI would lower the annual COLA more and more over time, reducing the value of Social Security benefits. It is not a more accurate measure of inflation for the elderly – and it would be especially harmful to women, because on average they live longer than men, rely more on income from Social Security, and are already more likely to be poor.
Recognizing that the chained CPI targets the oldest, poorest Americans some deficit-reduction plans propose an increase in Social Security benefits for long-term beneficiaries in an attempt to mitigate the cuts from the chained CPI. This analysis examines how effective the “20-year benefit bump-up” proposed in the Bowles-Simpson Fiscal Commission report would be in protecting the typical single elderly woman – a woman with an initial benefit of $1,100 per month, the median benefit for single women 65 and older – and other vulnerable beneficiaries from the impact of the chained CPI.
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