April 25, 2007 (Washington, DC) - In its annual report released to Congress earlier this week, Social Security's Trustees announced that the Social Security Cost of Living Adjustment (COLA) for 2008 - the annual adjustment provided to seniors each year to help them keep up with inflation - is forecast to be just 1.4 percent, and could be as low as 1.2 percent.

Since the COLA went into effect in 1975, it has never been lower than 1.3 percent, and has failed to exceed two percent only three times in its 32 year history.

That increase means that a senior with an average benefit of $1,044 would see a bump of just $14.60 per month beginning in January 2008.

In contrast, Medicare Part B premiums alone have increased by an average of more than 11 percent per year over the past five years. Due to hitting a spending warning this year, some analysts expect Part B premiums to climb by double digits again in 2008. As a result, the COLA would be wiped out for most seniors by increases in Part B premiums alone.

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 straight years.
 
"It seems like we keep saying the same thing each year, but the remarkable thing is that the numbers keep getting worse year after year," said Shannon Benton, executive director of The Senior Citizens League. "This is the third consecutive year that the smaller COLA means that many of our lower-income seniors are going to have to choose between home heating, prescription drugs, or a sufficient supply of groceries."

The Senior Citizens League is lobbying for a change in the Consumer Price Index (CPI) used to determine the COLA to help seniors offset the increasing cost of Medicare Part B. The government currently calculates the COLA based on the CPI for Urban Wage Earners and Clerical Workers (CPI-W), a slower-rising index that tracks the spending habits of younger workers who don't spend a high percentage of their income on health expenditures.
 
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 the COLA 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 $10,300 more over the past 23 years with the CPI-E. Texas Rep. Charles Gonzalez has introduced "The Consumer Price Index for Elderly Consumers Act," H.R. 1953, in the new Congress.

"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 Ms. Benton. "More members of Congress are supporting this legislation each year for good reason, and we will keep fighting until it passes."

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With 1.2 million members, The Senior Citizens League is one of the nation's largest nonpartisan seniors groups. 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. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.

PRESS CONTACT:   Brad Phillips, Phillips Media Relations
202-776-0640 (w)   202-446-4060 (c)    Brad@PhillipsMediaRelations.com

April 2007