How Does Your Brain Score? Take the Staying Sharp Brain Health Assessment

AARP to Ways and Means: Chained CPI is Less Accurate and a Significant Social Security Benefit Cut

The Chained CPI is NOT More Accurate for Retirees or the Disabled


August 12, 2013


AARP Media Relations

202-434-2560 | | @AARPMedia

AARP to Ways and Means: Chained CPI is Less Accurate and a Significant Social Security Benefit Cut

WASHINGTON, D.C. – AARP Director of Financial Security and Consumer Affairs Cristina Martin Firvida sent a letter Friday to the House Ways and Means Committee, outlining AARP’s opposition to proposals to adopt the ‘chained CPI.’ Excerpts from the letter follow; please contact AARP Media Relations for a copy of the entire letter.

“In response to your request for comments from the public on the adoption of what is known as the chained consumer price index (CPI), AARP would like to offer the following submission. In addition to our comments below, AARP has recently delivered to the Committee over 1.6 million petitions of those opposed to the adoption of chained CPI and many of our members continue to submit emails to the Committee with their concerns regarding this proposal…

Social Security Benefits are Vital but Modest

“Social Security is the only lifetime, inflation-protected, guaranteed source of retirement income that most Americans will have. It is the foundation of retirement security that keeps millions of older Americans out of poverty and allows them to live independently. Social Security also provides some measure of economic security for families who face a loss of income because of the disability or the death of a wage earner. The inflation protection provided through Social Security’s annual COLAs is a critical component to the success of the program…

The Chained CPI is NOT More Accurate for Retirees or the Disabled

“Despite claims to the contrary, the chained CPI is NOT a more accurate measure of inflation, especially for Social Security COLAs. In fact, it is even less accurate than the current formula.

“Currently, the COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical workers, otherwise known as the CPI-W. By definition, this index reflects the purchasing patterns of those Americans who are still in the workforce. However, retirees and those out of the workforce due to disability have different spending patterns. Retirees and the disabled spend much more on medical care than working Americans. Moreover, health care costs have risen much faster than inflation in the prices for other goods and services. But because the current CPI-W formula is based on the spending patterns of workers, not retirees, current COLAs are based on an index that already underreports the real cost of inflation experienced by seniors. As such, the current COLA is already lower-than-warranted for seniors and those who cannot work due to disability…

The Chained CPI is a Significant Benefit Cut

“Although many have attempted to characterize the chained CPI as a minor tweak, it is in fact a significant benefit cut that snowballs over time. The adoption of chained CPI would take approximately $340 billion dollars out of the pockets of current and near retirees, working families, veterans and the disabled, as well as the local economies in which they live, in the next 10 years alone. Specific to Social Security, the chained CPI cuts benefits by $127 billion over the next 10 years.

“Initially, the 0.3 percent annual cut in Social Security COLAs exacted by a chained CPI may look small, but it compounds over time. The greatest impact of the COLA cut will be on those who receive benefits over a long period of time; the oldest retirees and the long-term disabled. According to the National Women’s Law Center, ‘(f)or an individual who receives a monthly benefit of $1,100 per month at age 65, the chained CPI would reduce benefits by $56 per month ($672 annually) at age 80,’ which is equivalent to losing one week’s worth of food each month. The chained CPI would cut one full month’s income each year from a 92-year-old beneficiary’s annual Social Security benefits.

“AARP is greatly concerned that the oldest can least afford a COLA cut as reliance on Social Security as a source of guaranteed income only increases as people age. Americans in their 80s and 90s generally have less income, fewer financial assets, and are more dependent on Social Security than younger beneficiaries. They also face increasing out-of-pocket medical costs and are at greatest risk of poverty…

President’s Mitigation Efforts Fall Short

“In recognition of the fact that chained CPI would significantly erode the standard of living for millions of retirees, the disabled, veterans and the poor, the President’s FY2014 Budget attempts to shield certain ‘vulnerable’ populations from chained CPI’s harmful effects…

“The President’s mitigation proposals do not exempt those who receive Social Security retirement benefits. Instead, these beneficiaries are to receive two ‘bumps’ in their benefits after enduring decades of diminished COLAs. Vulnerable individuals would therefore see no help from the President’s proposals unless and until they turn 76... Nor do the President’s mitigation proposals exempt those on Social Security disability. They too would have to endure years of COLAs that do not keep up with the inflation they experience before receiving minimal bonuses.

“Remarkably, the President’s mitigation proposals do not exempt veterans, both retired and disabled. Many veterans depend on monthly benefits from retirement or disability compensation, both of which receive annual COLAs that would be reduced by a switch to the chained CPI. And veterans are often eligible for these benefits at younger ages than for Social Security and could experience the compounded cuts to benefits over many decades. It is also important to note that over 9 million veterans receive both Social Security and veteran’s benefits and would be hit by the chained CPI twice…

The American People Overwhelmingly Oppose Chained CPI

“In March 2013, AARP commissioned a national survey that examined older voters’ opinions on a proposal to adopt a chained CPI to reduce the deficit. AARP’s survey also looked at how favorability would be affected towards Members of Congress who voted for such a proposal. 

“The poll found older voters are nearly unanimous in their belief that Social Security benefits should not be reduced for today's seniors, with 87 percent saying the issue is ‘very important’ to them (89 percent Democrat, 86 percent Republican, 88 percent Independent)…

Social Security is Not a Deficit Driver

“Social Security benefits are financed through payroll contributions from employees and their employers, throughout an individual’s working life. The payroll contributions and benefits paid, including any administrative costs, are accounted for separately from the rest of the federal budget. 

“Further, by law, Social Security cannot pay out more in benefits (including administrative costs) than it has taken in over the life of the program. That is, the program has no statutory authority to borrow to pay benefits. Once the trust fund is exhausted, Social Security can only pay benefits to the extent it receives revenue from payroll contributions. As such, Social Security has not contributed to our large deficits…

Social Security Deserves Its Own Conversation

“In the face of declining pensions, shrinking savings, stagnating wages, and rising health costs, Social Security deserves its own national conversation that focuses on preserving and strengthening the retirement security of Americans and their families for generations to come. AARP welcomes that conversation and stands at the ready to engage with Congress, our members and other Americans on ways to strengthen Social Security now and in the future…


“AARP would like to thank Chairman Camp and the Ways and Means Committee for the opportunity to share our views and those of our members on the important role Social Security plays, and will play, in the lives of both current and future generations of Americans. We look forward to working with you and the other members of this Committee to ensure that any changes to Social Security are done in a way consistent with the needs and wants of the American people.”


AARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse. We advocate for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name as well as help our members obtain discounts on a wide range of products, travel, and services.  A trusted source for lifestyle tips, news and educational information, AARP produces AARP The Magazine, the world's largest circulation magazine; AARP Bulletin;; AARP TV & Radio; AARP Books; and AARP en Español, a Spanish-language website addressing the interests and needs of Hispanics. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates.  The AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at


Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts


Please wait...

progress bar, please wait

Help Us

If you have a story that you want to share, AARP is listening. Click here to send us your story.


If you are a reporter with a media inquiry please contact the AARP Media Relations office:  202-434-2560 or Or Follow us on Twitter @aarpmedia


If you are an AARP member and not with the press, please call 1-888-OUR-AARP or e-mail


From companies that meet the high standards of service and quality set by AARP.


Member Benefits AT&T Wireless Cell Phone

Members save 10% on the monthly service charge of qualified AT&T wireless plans.

Member Benefit AARP Regal 2

Members pay $9.50 for Regal ePremiere Tickets purchased online.

Walgreens 1 discount membership aarp

Members earn points on select Walgreens-brand health and wellness products.

Member Benefits

Join or renew today! Members receive exclusive member benefits & affect social change.