Social Security Benefits Can’t Keep Up With Inflation Unless We Do This
Inflation hit retirees particularly hard. Seniors living on fixed Social Security incomes have been struggling financially these past few years. An article by CNN cited a senior citizen advocacy group’s finding that “Social Security benefits have lost 20 percent of their buying power since 2010.” That means every $100 a household spent in 2010 would only purchase $80 of goods and services today.
Cost-of-Living Adjustment
To help retirees keep up with inflation, Social Security provides for an annual cost-of-living adjustment (COLA), if needed.
The problem is that these COLA increases often don’t keep up with the actual rise in prices. Analyses show that eight of the last 15 adjustments have come in lower than inflation for that year.
The article states that “Social Security benefits have risen by 58 percent between 2010 and 2024, but the cost of goods and services purchased by typical retirees jumped 73 percent during that time.” Over the past five years, only the 2023 adjustment, which was 8.7 percent, has beaten the rate of inflation.
The 2025 COLA will be announced in October. Current predictions are it will be 2.6 percent. This year’s COLA is 3.2 percent.
New COLA Calculator Needed
It’s clear that retirees need a better Social Security COLA calculator to better combat the impact of inflation.
Right now, the COLA is calculated based on the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). However, this does not include many of the expenses retirees typically face.
We at The Seniors Trust believe the Consumer Price Index for Americans 62 years of age and older (CPI-E) would be a better formula, as it more accurately reflects the costs incurred by older adults, especially related to healthcare and housing.
The Social Security Expansion Act calls for adopting the CPI-E. Not only would this provide Social Security recipients with a fairer COLA, but this landmark piece of legislation also provides across-the-board benefits boost of about $2,400 per year and long-term Social Security solvency.
