How Social Security COLAs Came to Be
The Social Security Administration will announce its 2025 cost-of-living adjustment (COLA) on October 10. According to a Newsweek article, it’s forecast to be 2.5 percent. That’s less than this year’s 3.2 percent COLA because we’ve seen inflation temper. While this low COLA may upset many beneficiaries, it’s important to understand that there was a time when Social Security benefits were a fixed amount and did not change, regardless of the economic climate. Here’s an explanation of how the Social Security COLA came to be.
Pre-COLA
According to the Social Security Administration, the first benefit payment was to Ida May Fuller in January 1940. The retired schoolteacher and legal secretary received $22.54 per month and that was supposed to be fixed for the remainder of her life.
That only lasted 10 years. Congress legislated an increase in benefits as part of the 1950 Amendments. At that time, Fuller saw her monthly check increase to $41.30. Two years later, a second increase was legislated. Together these two increases almost doubled the value of Social Security benefits for existing beneficiaries.
From that point on, benefits were increased only when Congress enacted special legislation for that purpose.
Adopting COLA
Everything changed in 1972 when legislation was enacted to provide automatic annual cost-of-living allowances based on the annual increase in consumer prices. No longer did Social Security recipients need to wait for an act of Congress to receive a benefits boost. And no longer did inflation drain value from Social Security benefits.
New COLA Calculator Needed
The Seniors Trust believes it’s time for another act of Congress. We want lawmakers to enact the The Social Security Expansion Act. It calls for using the Consumer Price Index for the Elderly (CPI-E) to calculate Social Security COLAs instead of the Consumer Price Index for Urban Wage Earners (CPI-W) used currently. The CPI-E takes the unique spending habits of seniors into account — particularly regarding the cost of healthcare and housing — and offers a more realistic COLA for retirees.
Please sign our petition to Congress and join us as we strive to improve the lives of senior citizens through passage of the Social Security Expansion Act.
