Many seniors to receive smaller Social Security checks in
2007 for the first time
WASHINGTON, Oct. 18 /U.S. Newswire/ -- Earlier today, the Social
Security Administration announced that the Cost of Living Adjustment
(COLA) for 2007 would be 3.3 percent. That increase means that a
senior with an average benefit of $1,011 will see a bump of $33 per
month beginning in January.
A majority of the 48 million Americans aged 65
and over who receive a Social Security check depend on it for at
least 50 percent of their total income and one in three
beneficiaries rely on it for 90 percent or more of their total
income. But because the Social Security COLA trails rising costs in
everything from Medicare to energy costs, seniors will see their
spending power diminish again next year, as it has for several
With home heating and energy prices soaring by
double digits, gasoline prices still up close to 25 percent
from two years ago and consumer interest rates rising, many
seniors will find the 3.3 percent COLA inadequate to keep up
with increasing costs.
Medicare Part B premiums, which will
rise 5.6 percent in 2007, will further eat away at their
COLA, since it will increase at a rate 70 percent faster
than the COLA next year. Medicare Part B covers doctors'
visits, tests and outpatient hospital care.
But for the first time in history, many seniors
will actually see a reduction in their Social Security checks due to
a little- known provision that was originally created to protect a
person's Social Security benefits from being reduced due to
increases in Medicare premiums.
Most seniors have Part B premiums deducted from
their Social Security checks. If the Medicare premium increase to
Part B is higher than the COLA increase, seniors are automatically
protected by law from having their checks reduced.
protection does not exist for Part D, which covers prescription
drugs -- and seniors who have their Part D premiums automatically
deducted from their Social Security checks will find that any
premium increases that are greater that the COLA will come directly
out of their checks.
This will affect a significant number of seniors
for the first time in 2007 since next year is the first opportunity
for drug plans to increase their rates after the 2006 initial
"Our 1.2 million members, most of whom are lower
income seniors, depend on their Social Security checks to make ends
meet," said Ralph McCutchen, chairman of TREA Senior Citizens
League. "We've already seen how the elderly suffer when the Social
Security Cost of Living Adjustment fails to keep up with rising
costs, but it's almost unimaginable to think what will happen to
them when their Social Security checks start going down each month."
To help provide relief to seniors, TREA Senior
Citizens League is lobbying for a change in the Consumer Price Index
(CPI) used to determine the COLA.
The government currently
calculates the COLA based on one of the most slowly rising CPIs --
the CPI for Urban Wage Earners and Clerical Workers (CPI-W). That
CPI tracks the spending habits of clerical workers, salespersons,
service workers and laborers -- typically younger workers who don't
spend as high of a percentage on health expenditures as seniors.
Nevertheless, seniors receive their annual Social Security COLAs
based on the spending patterns of these younger workers.
However, the government does track the spending
patterns of older Americans and has done so since 1983 with the CPI
for Elderly Consumers or CPI-E. By tying the annual increase in
Social Security checks for seniors to the CPI-E, seniors would see
much needed relief in their monthly checks.
For example, a senior who retired with a benefit
of $460 in 1984 would have received almost $9,500 more over the past
22 years with the CPI-E. Vermont Rep. Bernie Sanders has introduced
"The Consumer Price Index for the Elderly Act," H.R. 3601, which
currently has 108 co-sponsors in the House of Representatives.
"The CPI-E may sound like an obscure piece of
legislation -- but to our members, it can mean the difference
between tens of thousands of dollars during their retirement years,"
said Shannon Benton, executive director of TREA Senior Citizens
League. "More members of Congress are supporting this legislation
each year for good reason and we will keep fighting until it
With 1.2 million members, TREA Senior Citizens
League is one of the nation's largest nonpartisan seniors groups.
Located just outside Washington, D.C., its mission is to promote and
assist members and supporters, to educate and alert senior citizens
about their rights and freedoms as U.S. Citizens and to protect and
defend the benefits senior citizens have earned and paid for. Visit
or call 1-800-333-8725 for more information.