Implications of a ‘Chained’ CPI

The brief’s key findings are:

• Recent commissions have proposed a “chained” consumer price index to adjust Social Security benefits.
• The chained index, which allows spending patterns to shift as prices change, would rise more slowly than the current index.
• But the current index likely understates the inflation faced by the elderly, and the low-income elderly may have little flexibility.
• An alternative way for current retirees to bear some of the burden of a Social Security fix would be a one-time delay in the inflation adjustment.