Possible Change to Social Security COLAS May Result in Reduced Benefits

 Posted on December 18,2013 in Uncategorized

As anyone who is unable to work due to a disability can attest to, the importance of Social Security disability (SSD) benefits cannot be overstated. This federal safety net can often be the sole source of monthly income for those who simply cannot hold a job because of their disability – whether physical or mental.

In fact, according to the 2011 Annual Statistical Report on Social Security Disability Insurance Program – which is the most recent report available – there were 626,954 Social Security disability beneficiaries in Texas alone in 2011. Of these, 595,925 were between the ages of 18 and 64 – which represents roughly 3.7 percent of the total population in Texas.

Given the extreme importance of SSD benefits to such a large population of Texans, the recent discussion among federal lawmakers to link Social Security cost-of-living adjustments (COLA) to the chained consumer price index (CPI) – which would result in smaller cost-of-living adjustments – may be cause for concern among disabled workers.

Chained CPI and its impact on Social Security benefits

Specifically, discussions have been held by various lawmakers in which the idea of tying Social Security COLAs to the chained CPI has been floated as a way of reducing the deficit, according to Bloomberg BNA. If implemented, this change would reduce Social Security COLAs by 0.3 percentage points each year until 2085.

While 0.3 percent may not seem like a large reduction, it is important to note that this percentage accrues over time, meaning the reduction gets larger as time passes. For example, the co-director of the Center for Economic and Policy Research in Washington, Dean Baker, recently told Bloomberg that this 0.3 percentage drop would result in a three percent cut in Social Security COLAs in ten years, six percent in 20 years and nine percent in 30 years.

For anyone who counts on Social Security disability benefits as his or her sole source of income, these possible Social Security COLA reductions could have dire consequences.

Seek help if disabled and unable to work

However, regardless of whether the chained CPI is ever actually tied to Social Security benefits, the discussion alone illustrates just how important these benefits are to recipients. Unfortunately, many needy disabled workers are denied Social Security disability benefits when they first apply, which is why it is often advisable to speak with an experienced Social Security disability attorney if you are unable to work and are seeking benefits.