The Social Security Cost Of Living Increase Is Not Keeping Up government had used the CPI-E, seniors would have received a by Ralph McCutchen (NAPSA)—Is the COLA (Cost Of Living Adjustment) losing its fizz? Many seniors now feel that COLAincrease of 3.1 percent last year instead of 2.7 percent. Does the annual Social Security cost of living increase is failing to keep up with the soaring prices of such a small percentage increase matter? In a single year, not much. Overtime, it certainly does. For example, if Fran retired with an average benefit of $360 in 1984, she would have received about $8,629 more over the past everything from gas and heating bills to groceries and prescription drugs. As a result, seniors are suffering, and they’re suffering badly. In 2005, for example, the Social 21 years had the government used the CPI-E to calculate her COLA. Security cost of living increase was just 2.7 percent. Butif you filled up your car at the gas pump, you prob- ably noticed the 28 percent jump in In recent years, the annual Cost Of Living Adjustment that seniors depend on to keep up with gas prices. And when you paid your heating bill, you probably noticed rising costs has fallen short of doing so. soared by double digits as well. Meanwhile, the Federal Reserve kept raising its rate last year as the ConsumerPrice Index (CPI). that the price of home energy well, meaning that seniors watched helplessly as their already diminished spending power was cut even further as they paid higher rates on credit card bills, car loans and adjustable rate mortgages. The absence of a fair Social Security cost of living increase affects seniors in a very real way. Fran, a TREA Senior Citizens League (TSCL) member from New Hampshire, is typical of our mem- bers. She follows the news, knows what’s happening with herfriends and detects even subtle changes in prices. She recently told us that even her beloved oranges are getting too expensive to buy at her local grocery store. “I don’t think the politicians care about seniorsatall,” she told us. “I have friends whose sole source of income is Social Secu- rity, and they struggle each month to make ends meet. Each year, it gets worse. The politicians don’t care about people like them!” How The COLA Hurts You The COLAis tied to changes in While the public commonly thinks of the CPI as oneindex,this is not the case. There are several CPIs— each of which measures inflation rising in different rates, depending on which “market basket” the governmentis lookingat. However, the governmentcal- culates COLAs using one of the most slowly growing indexes—the Consumer Price Index for Urban Wage Earners and Clerical Workers. It surveys the goods and services that younger workers use. But younger workers havefar dif- ferent spending habits than se- niors, who must spend a much greater percentage of their income on health care. When the government calcu- lates the COLAfor an 80-year-old war veteran using the spending patterns of a 28-year-old young mother, something has gone terri- bly awry. How Underpayments Affect You The government does track senior costs, however, and has done so since 1983—maintaining the Consumer Price Index for Elderly Consumers (CPI-E). If the With compound interest, that means that she would have had tens of thousands of dollars more to help with medical expenses, home energy costs, and mortgage payments—and she could have purchased as many oranges as she would have liked. What We Can Do Over the past three months, we've been hearing from hundreds of seniors across the country. And what they've told us has come as a surprise. Even though Medicare is dominating the headlines, the Cost Of Living Allowance is dominating their thoughts. They want action, and their message is clear. They’re tired of partisan squabbling in Washington. Although we seniors turn out in high numbers during each election cycle, our representatives too often take our votes for granted. Only by presenting a unified mes- sage in large numbers will we influence legislators to take us with the seriousness wedeserve. To learn what you can do to increase the COLA, visit www. tscl.org or call (800) 333-8725. Ralph McCutchen is the volunteer Chairman of TREA Senior Citizens League, an organization that educates and alerts seniorcitizens about their rights and freedoms as U.S. citizens, and protects and defends the benefits seniorcitizens have earned and paidfor.
