Alexandria, VA (PRWEB) October 15, 2013 -- The 2014 Social Security cost-of-living adjustment (COLA) will mark the lowest five-year growth period since COLAs became automatic in 1975, according to a new estimate from The Senior Citizens League (TSCL). The 2014 COLA will be about 1.4% - 1.5%, and with the 2014 COLA, TSCL estimates that the average annual boost paid over the five-year period including 2014, will hit new lows — about half the normal COLA average of 3%. Yet despite the tepid growth, some policy makers contend that COLAs still overpay seniors. In order to reduce budget deficits, they propose slowing growth in COLAs by switching to a more slowly growing “chained” consumer price index to calculate the annual boost. This preliminary estimate was recently released by TSCL and shared by other economists and senior advocates. The exact size of the COLA has yet to be announced due to the recent government shutdown.
More than 54 million beneficiaries rely on COLAs to protect the purchasing power of their Social Security benefits. But the record lows in recent years are wreaking havoc on Social Security income in two ways. “The buying power of the Social Security benefits received by current retirees is eroding, and low COLAs will also result in lower initial retirement benefits for seniors over the age of 60 even if they haven’t yet filed claims,” states TSCL Chairman, Ed Cates.
According to TSCL’s 2013 Survey of Senior Costs, Social Security benefits have lost almost one-third of their buying power since 2000. Since 2000, the COLA increased benefits just 38 percent while typical senior expenses have jumped 81 percent, more than twice as much. Seniors who haven’t claimed benefits yet are also affected because COLAs are used in the benefit formula to determine the initial benefit amount. Because COLAs compound like interest over time, low COLAs can have a big impact — by thousands of dollars for newer retirees — on total life-time benefits due to the loss of compounding.
But COLA reductions aren’t the only deficit reduction proposal that budget cutters are considering. Seniors could also be hit with higher Medicare costs. Leading deficit proposals would shift more costs to seniors. Congress is considering higher Medicare deductibles and imposing new cost sharing in addition to expanding Means Testing. TSCL is concerned that Means Testing proposals would, in a few years, require even middle-income seniors to pay a bigger portion of the Medicare Part B premium, because the income thresholds are fixed and would not be adjusted like income brackets.
TSCL is fighting COLA cuts and changes that would shift more Medicare costs to seniors. “We encourage seniors to contact your Members of Congress,” says Cates. “Let’s tell them how increasing Medicare costs and cutting COLAs would impact your retirement income and the quality of your life,” he urges. To learn how much COLA cuts would cost you, try TSCL’s Chained COLA calculator. To subscribe to TSCL’s newsletter The Social Security and Medicare Advisor, visit http://www.SeniorsLeague.org.
With about 1 million supporters, The Senior Citizens League is one of the nation's largest nonpartisan seniors groups. Located just outside Washington, D.C., 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 TREA The Enlisted Association. Please visit http://www.SeniorsLeague.org or call 1-800-333-8725 for more information.
Shannon Benton, The Senior Citizens League, +1 (703) 548-5568, [email protected]
SOURCE The Senior Citizens League