Sometimes bad ideas just won’t go away. This is the case for the proposal to change the way the cost-of-living adjustment (COLA) for Social Security benefits is calculated by switching to a new measure of inflation (the chained CPI). This proposal has been billed as a mere technical adjustment to benefits but we debunked that myth this summer in our report Cutting the Social Security COLA by Changing the Way Inflation is Calculated Would Especially Hurt Women which showed that switching the COLA is nothing more than a sneak attack on Social Security benefits. The report explains how the current COLA already underestimates the effects of inflation on the elderly and fails to account for a crucial fact — that older people spend a much larger share of their budget on health care, where costs are rising much more quickly than with other expenses. And switching to the chained CPI would only put these beneficiaries farther behind.
The report also showed that changing the way the COLA is calculated would be particularly painful for women:
- Since women live longer than men, they would face deeper cuts in their Social Security benefits under the proposed new measure of inflation, because the cuts from this reduced COLA get deeper each year.
- Since women have less income than men, these cuts would represent a larger share of their total retirement income.
- Finally, since older women are already more economically vulnerable than older men, these cuts would leave many of them unable to meet basic needs.
Despite this evidence, proposals to switch the COLA have stuck around all fall. Well if our earlier report wasn’t enough evidence for policy makers to stop pushing this terrible proposal, a new Census report, 90+ in the United States: 2006-2008, should help convince them. The Census data provide a detailed picture of the nation’s rapidly growing 90-and-older population. The data show that women are three-quarters of the very elderly (individuals 90 and older), a group that has almost tripled in the last 30 years to nearly two million, and that will grow to more than eight million by 2050. The Census data also show that very elderly women are more economically insecure and more likely to have a disability than very elderly men.
The new Census data highlight the precarious situation of many very elderly women and add weight to the conclusion of NWLC’s report — that switching the Social Security COLA to the chained CPI would especially harm very elderly women — a growing group of women who are least able to bear the burden. For our full analysis of the new Census data check out our fact sheet.
Super-committee members, please take note!