January 04, 2016
Expand Social Security, Says New York Times
The New York Times editorial board wrote recently that we need to expand Social Security. It was a wonderful way to start the new year – and a fitting position, given that Social Security recipients will not receive a cost-of-living adjustment (COLA) in 2016.
The Times’ logic might convince even the most conservative among us that it is time to expand Social Security. In 2013, only 44 percent of workers on the bottom half of the income scale had a retirement plan at work. That was down from 54 percent in 1995, according to data from the Federal Reserve.
Moreover, the Government Accountability Office recently found that 52 percent of American households with someone 55 or older have nothing saved for retirement. Worse, only half of that 52 percent will collect anything from a company pension.
Nearly all of the Republican candidates for President in 2016 have called for cuts to Social Security benefits. Yet Social Security prevents approximately 26 million seniors from falling below the poverty line each year. By increasing the costs of health care, prescriptions and housing for those on a fixed income, we break the promise of a secure retirement. If we expand Social Security, we can keep that promise.
That is why members of the Alliance for Retired Americans agree so heartily with the Times ed board. The Alliance supports implementing a new formula for determining future Social Security COLAs, the Consumer Price Index for the Elderly (CPI-E). It is a fix that will address the possibility of a 0% COLA happening once more in 2017 and repeatedly in later years.
Currently, Social Security uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate COLAs. It takes into greater account factors such as fuel prices, apparel, and education that disproportionately affect younger Americans. There was a nearly 30 percent drop in gas prices in the past year. That directly impacted the CPI-W but primarily affects younger citizens. The CPI-E would base the calculation on what seniors actually spend their money on. That list includes items such as health care and housing. It is a far more accurate measure than the CPI-W.
Using the CPI-E would have provided seniors with a small COLA in 2016, and would prevent further, unfair and inaccurate adjustments in the future.
Richard Fiesta
Executive Director, Alliance for Retired Americans