Some in Washington are pushing a budget proposal that, by cutting Social Security benefits, would unfairly hurt women. Called the “chained CPI,” the proposal would change the yearly cost-of-living adjustment (COLA) for Social Security, reducing benefits by $127 billion over 10 years.
The benefit cut would start now and grow over time, making it increasingly hard for women who get Social Security benefits.
Washington should address the nation’s budget challenges in responsible ways, not with proposals that will hurt retired women and generations to come.
Here are the top five reasons why the chained CPI would hurt women.
1. Women can least afford a cut in benefits. Women earn less on average than men, are more likely to work part time and are more likely to have gaps in their employment. All these factors result in lower average annual benefits for women (about $13,000) than men (about $17,000).
2. Women would face deeper cuts. Women tend to live longer and make up a larger share of the population as it ages. More than two out of three (68 percent) Social Security beneficiaries age 85-plus are women. Because the chained CPI would cut benefits more with every passing year, women will see a greater share of these cuts.
3. Women rely more on Social Security for nearly all of their income. Women are less likely to have other sources of retirement income, such as pensions and savings, and rely more on Social Security for nearly all of their income. In 2010, 38 percent of women age 80-plus that lived in a family receiving Social Security relied on it for 90 percent or more of their income, compared with 28 percent of men age 80-plus.
4. Social Security keeps women out of poverty. In 2011, Social Security kept roughly 38 percent of older women out of poverty compared with 32 percent of older men.
5. The chained CPI is less accurate. The chained CPI assumes that when the cost of something you normally buy goes up, you will substitute a lower-cost item. This theory falls short because many seniors spend much of their money on basic goods such as heath care — the costs of which rise faster than inflation and it doesn’t have lower-cost substitutes. The burden of health care spending is even greater for women (18.7 percent of income compared with 14.2 percent for men) because their benefits are lower and health care spending is higher.
Also of Interest
- The chained CPI explained
- 5 reasons the chained CPI is bad for Social Security
- Join AARP: Savings, resources and news coverage
See the AARP home page for deals, savings tips, trivia and more
What the Heck Is Chained CPI? Learn about the budget proposal that could cut the value of your Social Security benefits.