The AARP organization is asking for people to sign a petition addressed to President Obama and their representatives in Congress to not change the way the cost-of-living adjustments (COLAs) are made for Social Security. President Obama has said he would be willing to accept using what is called the “chained” consumer price index to calculate the COLAs in the future.
I’ve read a few descriptions of why the COLAs should be changed. One is that retired people don’t have some of the expenses involved in standard inflation calculation. For example, retired people typically aren’t looking for a new home, so an increase in the price of housing doesn’t need to be used to calculate their new benefit. Another reason is that people can shop around and buy a less expensive substitute. An AARP explanation of chained CPI gives the example that if beef prices go up people can buy more chicken. Continue reading
