WASHINGTON, April 6 (UPI) — For an average U.S. worker retiring at age 65, the proposed Chained Consumer Price Index would cost $650 a year by age 75, a non-profit group says.
Dean Baker, a co-director of the Center for Economic and Policy Research in Washington, said the president’s budget plan will likely feature a proposal to adopt a chained CPI for the calculation of Social Security cost of living adjustments.
The administration suggested this was a mere tweak to entitlements that will make Social Security benefit calculation more accurate in exchange for raising more revenue. However, the change amounts to a substantial cut to Social Security benefits, Baker said.
“Switching from the current index to the chained CPI would immediately begin to cut benefits and would continue to do so year after year,” Baker said. “An average worker retiring at age 65, would get a yearly cut of $650 by age 75, but at age 85, this would be a cut of $1,130 a year.”
Baker said the chained CPI would have a much larger impact on the income of most retirees than President Obama’s tax increases last year did on the wealthy.
For a couple earning $500,000 a year, their taxes went up by $2,300 a year. That is less than 0.5 percent of their pre-tax income and a 0.6 reduction of their after tax income.
Since Social Security is about 70 percent of the income of the typical U.S. retiree, switching from the current index to the chained CPI would be a reduction in income of more than 2 percent, more three times that of the tax increase to the wealthy, Baker said.
Copyright 2013 United Press International, Inc. (UPI).
4 thoughts on “Chained CPI could cost retiree $650/yr”
First it was the Republicans throwing seniors under the buss and now it it Obama that is using seniors to advance his special projects. Vote them all out.
So let me get this straight. After working for 50 years or more, paying into SS those 50 years and retiring at age 65, IF, I live to be 85, my total yearly SS amount will be cut by $1130.00. Now that doesn’t sound like much does it, roughly $100.00 a month. A hundred dollars a month IS, alot of money to most people. This is just another scheme by the government to try and fix SS, at the workers expense. My aunt was a notch baby, she got $500 a month from SS, try living on 500 a month. How about if the government take a pay cut, and put back all the SS money they took, for whatever scheme they had going at the time.
This is only the “Hope and Change” the majority voted for. Whats the big deal???
That’s right, you voted for him, now live with it.