‘Chained COLA’ is the stealth Social Security benefit cut

Social Security’s yearly cost-of living adjustments (COLA) are targeted for reduction through a proposed “chained COLA” formula, and that could be a huge problem for those dependent on Social Security income.

“COLA is an invaluable feature of Social Security,” says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security.

“Practically no private pension plans and state and local retirement programs provide comparable protection,” says Bernstein, the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law.

According to Bernstein, Republican “reformers” propose to reduce COLA claiming that the current method of calculating it overstates inflation.

“This unrealistically assumes that people have the opportunity to buy lower-priced substitutes when millions of people lack access to markets that offer such choices,” he says.


The proposed measure — chained COLA — would reduce the benefit under the current formula by an additional 3/10ths-of-one-percentage-point every year.

“This utterly arbitrary new element suggests that the name of the game is simply to reduce each year’s COLA and to do it by what they regard as unnoticeably minute amounts,” Bernstein says.

“But such a conclusion, made by people with current jobs and full stomachs, does not capture how detrimental any reduction would be for beneficiaries.

“Social Security is the largest part of income for most recipients; for almost 80 percent of them, it is half or more; for 60 percent, it is more than half; for 30 percent of recipients, it is all of their income.

“To those heavily dependent on Social Security’s modest benefits, which average $1,100 a month, small subtractions would hurt, while for those currently employed with a reasonably good income, such reductions may seem too small to worry about. But those ‘small’ reductions accumulate.”

After 5 years of chained COLA, benefits would be 1.5 percent behind price increases; after 10 years, 3 percent. After 20 years, the benefit reduction would be 6 percent.

Bernstein says that chained COLA would reduce benefits more every year while beneficiary needs grow because non-Social Security sources — work and other programs — typically shrink over time and one’s ability to perform services for one’s self diminishes with age.

Bernstein discusses the new COLA proposal in his recent Huffington Post article, “Upcoming Budget Battle: The Stealth Social Security Benefit Cut by ‘Chained Cola’”.

To read more, visit huffingtonpost.com/joan-and-merton-bernstein/upcoming-budget-battle-th_b_853275.html?ref=email_share.