The Growing Case for a New Social Security COLA Calculator
Social Security recipients are getting their biggest cost-of-living adjustment (COLA) in over 40 years. With a 2023 COLA of 8.7 percent, the average Social Security check will increase by about $140 per month next year. The benefits boost is to help offset the higher prices we’ve been experiencing due to inflation. While the COLA increase will certainly help struggling seniors, an article by Yahoo! Finance reveals that it might be too little too late.
The reason being, COLA is calculated based on past Consumer Price Index (CPI) rates. So, by the time the COLA is implemented, seniors have already been paying higher prices throughout the prior year. The article went as far as to quote a financial expert who said, “the fact that the increase lags behind the increase in CPI means that recipients’ benefits are reduced.” Basically, he’s saying that retirees are getting too little too late.
New COLA Calculator
There’s another fatal flaw with the way the COLA is calculated. Currently, the COLA formula it is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W. The Seniors Trust believes the better option is to use the Consumer Price Index for the Elderly, or the CPI-E, instead. That index specifically tracks the spending of households with people aged 62 and older. It places greater value on rising costs of expenses unique to seniors such as housing, healthcare and medicine. This would provide a much fairer cost-of-living adjustment for retirees because it would adjust based on the actual prices seniors are paying.
Securing Social Security
Changing the COLA calculator is just one of the main tenets of the Social Security Expansion Act. This landmark piece of legislation would also benefit retirees by providing an immediate Social Security benefits boost. It calls for increasing monthly benefits by about $200 on average, which would help put more money in the pockets of deserving retirees.
