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Average Social Security Benefits

2012

2013

% Ch. 2014

$ Ch. 2014

2014

All Retired Workers

$1,240

$1,261

1.50%

$19

$1,280

Aged Couple, Both Receiving Benefits

$2,014

$2,048

1.50%

$31

$2,079

Widowed Mother and Two Children

$2,549

$2,592

1.50%

$39

$2,631

Aged Widow(er) Alone

$1,194

$1,214

1.50%

$18

$1,232

Disabled Worker, Spouse and One or More Children

$1,887

$1,919

1.50%

$29

$1,948

All Disabled Workers

$1,113

$1,132

1.50%

$17

$1,149

This chart assumes a 1.5% increase in the Social Security COLA for 2014 and estimates increases


Social Security News

Senior Citizen League Projecting Small 1.5% COLA for Social Security in 2014

SSA should make it official on October 15, after September CPI is calculated; advocates keeping close eye on chained CPI proposed by Obama, CPI for elderly ignored for years

By Tucker Sutherland, editor, SeniorJournal.com

 
 

Shannon Benton,
TSCL Executive Director

Oct. 3, 2013 – Senior citizens will get a very small increase in their Social Security benefit next year, according to the current projection by The Senior Citizens League. With only the cost of living change for September to go to complete the calculation, the 2014 COLA (cost-of-living allowance) will be about 1.5%, according to Shannon Benton, Executive Director of TSCL. The official word from SSA is expected on October 15.

“If this proves to be correct,” says Benton, “then the average COLA paid over the past five years was 1.4%.  This would be a record low period since the COLA became automatic.”

“The purpose of the COLA,” according to SSA, “is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.”

 

Related Archived Stories

 
 

Chained CPI Affects More Than Social Security COLA, Seniors Would Get Less, Pay More

The Seniors Citizens League (TSCL) continues to be an unrelenting fighter to preserve Social Security and the cost-of-living allowance now in place - COLA for 2014 should be announced this month

By Tucker Sutherland, editor

Oct. 2, 2013


Read more Social Security News

also check Medicare and Senior Politics

 

The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor.

For purposes of determining the COLA, the average CPI-W for the third calendar quarter of the last year  is compared to the average CPI-W for the third calendar quarter of the current year. 

The resulting percentage increase, if any, represents the percentage that will be used to increase Social Security benefits beginning for December of the current year. 

SSI benefits increase by the same percentage the following month (January). If the increase in the CPI-W is at least one-tenth of one percent (0.1 percent), there will be a COLA. However, if the CPI-W increases by less than 0.05 percent, or if the CPI-W decreases, there will not be a COLA.

This year, there is a focus among senior citizens and their advocates on the change of several CPIs, since President Obama suggested earlier that the annual COLA should be based on an inflation measure known as the “Chained CPI” which is identified as “C-CPI.”

The chained CPI, according to AARP, “measures living costs differently because it assumes that when prices for one thing go up, people sometimes settle for cheaper substitutes (if beef prices go up, for example, they'll buy more chicken and less beef).

“Bottom line: Cost-of-living adjustments would be lower with the chained CPI than with the plain old CPI. So depending on which formula is used, the amount of your Social Security payments could change over time.

“How much could payments change? Estimates show that under the chained CPI, your cost-of-living adjustment (COLA) would be about .3 percentage point below the plain old CPI. That works out to $3 less on every $1,000, which doesn't sound like much — except that it keeps compounding over time.”

AARP, like virtually all senior organizations, opposes the change to the C-CPI. (Read “What’s the Chained CPI”.)

From December 1982 through December 2011, the all-items CPI-E rose at an annual average rate of 3.1 percent, compared with increases of 2.9 percent for both the CPI-U and CPI-W.

There are several reasons that older Americans faced slightly higher inflation rates over the past 29 years.

 First, older Americans devote a substantially larger share of their total budgets to medical care. The share of expenditures on medical care by the CPI-E population is roughly double that of either the CPI-U population or the CPI-W population. In addition, over the 1983–2011 period, medical care inflation increased significantly more than inflation for most other goods and services (5.1 percent annually for medical care, compared with 2.8 percent for all items less medical care).

Second, older Americans spend relatively more on shelter, and during the last 29 years shelter costs have modestly outpaced overall inflation.

Although the CPI-E generally outpaced the official measures of inflation over the 1983–2011 timeframe, recent trends show different results. From 2006 to 2011, both the all-items CPI-E and the CPI-U rose at an average annual rate of 2.3 percent, while the CPI-W increased 2.4 percent.

This turnaround was caused primarily by changes in the relative inflation rates of medical care and shelter, compared with the overall inflation rate. Specifically, the gap between medical care inflation and overall inflation has generally fallen since 2005, and shelter inflation has been rising slightly more slowly than overall inflation over the 2006–2011 period.

The Consumer Price Index for the Elderly

The Bureau of Labor Statistics says it calculates official price indexes for two population groups.
   • One is the Consumer Price Index for All Urban Consumers (CPI-U), which represents the spending habits of about 88 percent of the population of the United States.
   • The other is the CPI for Urban Wage Earners and Clerical Workers (CPI-W), a subset of the CPI-U population, which represents about 29 percent of the U.S. population.

BLS also calculates “an experimental CPI for the elderly,” or CPI-E, by using households whose reference person or spouse is 62 years of age or older. In 2009–2010, approximately 24 percent of all consumer units met the CPI-E's definition of having a reference person or spouse 62 years of age or older.

The TSCL, like most of the advocacy groups, are watching all three of these CPIs to monitor the impact of the Social Security COLA.

“The CPI-E has been rising slowly but steadily, more quickly than the CPI-W, in recent months, says TSCL Executive Director Benton,..  We suspect that medical costs are once again starting to rise and causing the slight increase.  

Here is the current tracking by TSCL of the increase of the three CPIs in 2013.

   • CPI-W: 1.5%

   • C-CPI: 1.4%

   • CPI-E: 1.6%

Below is a chart showing the annual COLA since 1975

Social Security
Automatic Cost-Of-Living Adjustments

July 1975 -- 8.0%
July 1976 -- 6.4%
July 1977 -- 5.9%
July 1978 -- 6.5%
July 1979 -- 9.9%
July 1980 -- 14.3%
July 1981 -- 11.2%
July 1982 -- 7.4%
January 1984 -- 3.5%
January 1985 -- 3.5%
January 1986 -- 3.1%
January 1987 -- 1.3%
January 1988 -- 4.2%
January 1989 -- 4.0%
January 1990 -- 4.7%
January 1991 -- 5.4%
January 1992 -- 3.7%
January 1993 -- 3.0%
January 1994 -- 2.6%

January 1995 -- 2.8%
January 1996 -- 2.6%
January 1997 -- 2.9%
January 1998 -- 2.1%
January 1999 -- 1.3%
January 2000 -- 2.5%
(1)
January 2001 -- 3.5%
January 2002 -- 2.6%
January 2003 -- 1.4%
January 2004 -- 2.1%
January 2005 -- 2.7%
January 2006 -- 4.1%
January 2007 -- 3.3%
January 2008 -- 2.3%
January 2009 -- 5.8%
January 2010 -- 0.0%
January 2011 -- 0.0%
January 2012 -- 3.6%
January 2013 -- 1.7%

(1) The COLA for December 1999 was originally determined as 2.4 percent based on CPIs published by the Bureau of Labor Statistics. Pursuant to Public Law 106-554, however, this COLA is effectively now 2.5 percent.


 

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