COLA

Social Security’s cost of living adjustments (COLA) are designed to protect against the erosion of retiree purchasing power when prices go up, as measured by the Consumer Price Index (CPI). “Now Social Security self-styled ‘reformers’ seek to lower COLA every year based on their claim that COLA overstates inflation,” says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security. The proposed substitute for the current CPI formula, ‘Chained COLA,’ is based on the assumption that benefit recipients substitute lower-priced goods as prices go up. “This the assumption is unrealistic for those millions who only have access to convenience stores that typically offer fewer choice and higher prices,” says Bernstein, the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law. “And, further, it is not reasonable to assume that most consumers can outwit the wiles of merchandising experts.”