Monday, October 24, 2016

Social Security, the COLA and the SAVE Benefits Act

Last week it was announced that Social Security Disability beneficiaries will get a tiny cost of living adjustment (COLA) to their monthly check of only .3 percent.  Federal Law mandates that Social Security COLA's must be based on a consumer price index known as CPI-W which relies heavily on oil prices.
This means that the average disabled or senior beneficiary will get only an additional $3 to $4 a month. This is the fifth year in a row of minuscule raises.  In fact, last year there was no COLA at all.
Many Social Security Disability lawyers and advocates have pointed out that the measure of inflation used by the CPI-W is not a proper methodology for measuring the economic reality faced by most seniors and disabled Americans.  CPI-W is meant to be used for wage earners in urban areas.  It was not developed to asses the cost of goods and services most often purchased by retired or disabled individuals.
In response to the unfairness caused by the very small COLA paid to Social Security beneficiaries, a group of prominent U.S. Senators, including Elizabeth Warren (D-Mass), Bernie Sanders (I-VT) and Chuck Schumer (D-NY), have proposed a special one-time payment of $581.  This legislative initiative is know as that the "SAVE Benefits Act.  This figure of $581 represents 3.9 percent of the average annual Social Security benefit. The 3.9 figure was picked by Senator Warren because this was the average raise received last year by top corporate CEO's.  According to the Senator from Massachusetts this small one-time payment could cover three months of groceries for a disabled person or or a whole year of out of pocket expenses for prescriptions.
Last Sunday Senator Schumer met with disabled beneficiaries in the Lower East Side of Manhattan to learn more about their situation and promote the Save Beneficiaries Act.  For a great article about the economic plight of some SSD beneficiaries in NYC click here.