The Social Security Administration has announced that benefits payments will increase by 1.7% in 2013; this increase is down from the previous year’s 3.6% cost-of-living adjustment (COLA) increase. That means that if you are receiving the average benefit of $1,236, you will see about $21 more per month.
The Social Security COLA is based on a version of the U.S. Consumer Price Index (CPI), and any percentage increase from the previous year’s third quarter is designated as the following year’s COLA. The 2013 COLA is one of the lowest since the inception of the adjustments in 1975.
Several Social Security reform organizations have proposed reducing the financial burdens on the Social Security program by using a less-generous CPI formula to calculate the COLA. Other organizations, particularly those that represent seniors, support the use of an “elder” CPI that is designed to measure where older Americans spend their money on; this “elder” CPI formula would, most likely, provide more weight to medical expenses.
Senator Bernie Sanders (Independent – Vermont), the founder of the Defending Social Security Caucus in the Senate, cautioned that the COLA adjustment should not be used as an excuse to cut benefits for Social Security recipients. In an article in E-News Park Forest published October 16, the senator is quoted as saying, “The method for calculating inflation for seniors is broken….It would be a shock to millions of seniors and disabled veterans to learn that some in Washington think that their current COLAs are too generous.” In a proposal similar to that offered by the aforementioned seniors’ groups, Senator Sanders supports an increased benefits plan that takes into consideration the high costs of health care and prescription drugs as well as the necessities such as home heating and cooling.