Erik Reuter wrote:
The benefit formula has been indexed to wages for years.
No. COLAs are based on the Consumer Price Index, which is based on a market basket of goods.
Although there are plenty of people who argue that the CPI is biased upward, the problem with it relative to the actual cost of living of Social Security beneficiaries is that it doesn't include things like health care and prescription drugs, costs that have gone up faster than the CPI.
To be more specific, COLAs are based on the CPI-W -- the Consumer Price Index for Urban Wage Earners and Clerical Workers and thus excludes most SS beneficiaries by definition. The government's own CPI-E, which is designed to track the cost of living for the elderly, has been rising rather faster than the CPI-W.
I suspsect that if you talk to actual people have been living off Social Security, you'll find that virtually all are being forced to give up more and more because the benefits don't go as far as they used to.
In other words, to reiterate what I said at the start of this, the benefits are based on a sector of the economy that is growing more slowly than the beneficiaries' cost of living.
Nick wrote: "We haven't [increased social security payments faster than cost of living] in the past". Dead wrong.
Not wrong, just inconvenient for those who want to cut benefits. You've accepted a metric that understates the real cost of living for the most needy people in our country. I don't accept it. The government's own data shows that the COLAs understate senior costs.
Anecdotally, I sure haven't heard any retired folks boasting of a rising standard of living thanks to Social Security. Pretty much the opposite. Anyone else?
Nick
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