Seniors need to be aware of COLA issues
There is a new threat to seniors’ retirement income, the Chained Consumer Price Index. If you are receiving Social Security or any other federal pension income, then you are aware that in October of each year a COLA or Cost of Living Adjustment for your pension is announced for the next year.
Both President Obama’s proposed budget and the Republicans in the House of Representatives are calling for a change to a new Index called the Chained CPI. This index, they claim will save the federal government billions of dollars over the next 10 years. That may be true, but each dollar that it saves will be at the expense of those of us receiving federal pensions.
The current index, the CPI-W, uses a basket of consumer items and calculates the cost increase of the items in the basket over the year to calculate your COLA for the next year. The Chained CPI takes into consideration your reaction to the increased cost. If steak is one of the items in the basket and the price goes up, you may switch to chicken until you get the new COLA.
The Chained CPI sees that change and replaces chicken for steak in the basket so that your next COLA is based on the price increase in chicken instead of steak. The Chained CPI will gradually lower your standard of living each year, which is exactly what it is meant to preserve.
Congress is expected to take up the issue of the Chained CPI in September. With both the president and the Republicans pushing it, the chances of its passage are too high for us to sit on the sidelines and hope. We need to act now to convince our legislators in Washington that the Chained CPI is not acceptable to seniors. I urge you to call, write or email Senators Carper and Coons and Representative Carney now. Protect our standard of living.
president, Delaware Federation of NARFE Chapters