Chained CPI Can Hurt Your Retirement

It appears that the Federal government is not yet finished attempting to pay for the sins of the rich by sticking it to the rest of us. Some lawmakers are considering a plan to “change how the government measures inflation in Social Security payments.” This chained CPI can hurt your retirement.

Millions of older Americans suffer from growing poverty and chained CPI will make the situation even worse.

Chained CPI can hurt your retirement

The government currently calculates Social Security’s cost-of-living adjustment, or COLA, each year based on how inflation affects urban wage earners and clerical workers. Known as CPI-W, this index measures changes in the prices of a fixed basket of goods that are deemed to be representative of regular purchases by wage earners.

In contrast, the chained-CPI assumes that as prices increase, consumers make substitutions in what they purchase. The common illustration is that if the price of beef increases but the price of chicken is stable, consumers will purchase less beef and more chicken.

Thanks, Washington. At least the price of dog and cat food is still low.

The chained-CPI is being proposed to adjust not only Social Security benefits, but also benefits from a host of other federal programs, such as federal pensions, veterans benefits and Supplemental Security Income (SSI).

When corporations, the very wealthy, and their lobbyists have more influence with lawmakers than average voters have, we’re in serious trouble. And right now, we’re in serious trouble.

With Social Security, one reason that’s a concern is that millions of seniors depend on the program just to get by. According to the Social Security Administration, 86 percent of U.S. households with one member aged 65 or older, or nearly 39 million Americans as of the end of 2011, receive Social Security benefits. For these households, Social Security income represents the largest component of their total income, at 37 percent, followed by wages at 30 percent.

It’s unfortunate that our elected officials choose to ignore the interests of the many in favor of the interests of the few who are able to make large contributions to election campaigns. Chained CPI can hurt your retirement, so speak up and let your elected representatives know how you feel.

Click here to read more about how chained CPI can hurt your retirement.

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