According to a Reuters news article and the Congressional Budget Office (CBO), “millions of seniors will receive smaller Social Security checks next year, and none of the 37 million seniors who receive Social Security will get an increase.” This news comes alongside another forecast from the CBO, one that indicates a zero COLA (Cost of Living Adjustment) for 2011.
According to the article, 2010 would serve as a milestone for seniors as it would be the first time since the introduction of COLA in 1975 “that seniors would fail to get an increase. Since automatic raises were established, seniors have never failed to receive an annual increase of less than 1.3 percent.”
Sources indicate that the many of the cuts are the result of high prescription costs and drug plans — costs which many have deducted automatically from their Social Security checks.
Reuters states that “Almost 70 percent of beneficiaries depend on Social Security for 50 percent or more of their income. Social Security is the sole source of income for 15 percent of beneficiaries.”
Opponents of a zero COLA cite rising poverty among seniors and incorrect calculations of senior costs in determining COLA as points of frustration with the forecast. Groups like The Senior Citizens League (TSCL ) “wholeheartedly support” help from Congress.
Those who support the changes to COLA indicate that such a measure is only fair in times of economic hardship, but fail to address the miscalculations of senior costs that influence COLA.
According to Reuters, “The government currently calculates the COLA based on the CPI for Urban Wage Earners and Clerical Workers (CPI-W), a slow-rising index that tracks the spending habits of younger workers who don’t spend as much of their income on health expenditures.”
Currently, TSCL supports several bills designed to help analyze senior spending and identify its impact on COLA as well as any legislation put out by Congress in defense of COLA.