Why a High COLA is Not Necessarily a Good Thing

Early predictions are that next year’s Social Security cost-of-living adjustment (COLA) could be 4.7 percent. While that might seem like a good thing compared to this year’s modest 2.8 percent COLA, it’s far from it. According to an article by The Motley Fool, a bigger COLA could mean bigger financial strain for seniors. It points out that “large Social Security COLAs come at the cost of rising prices.”

The COLA is set based on inflation data collected during July, August, and September. So, for the 4.7 percent forecast to become a reality, prices will need to stay elevated throughout the summer. That’s bad news for seniors already struggling with the high costs, especially food and gas.

A big part of the problem is the way COLA is currently calculated.

Calls for a Better COLA Calculator

Senior advocates, including The Seniors Trust, believe the Consumer Price Index for the Elderly (CPI-E) should be used to calculate the COLA instead of the Consumer Price Index for Wage Earners (CPI-W). This index shows how inflation actually impacts the typical retiree based on seniors’ spending habits. 

We are calling on Congress to enact the Social Security Expansion Act. It calls for adopting the CPI-E as the COLA calculator, better ensuring that Social Security benefits keep pace with inflation.

Additionally, this landmark piece of legislation would also extend the solvency of the Social Security trust fund through 2096, expand Social Security benefits by about $200 a month for current and new beneficiaries, require millionaires and billionaires to pay their fair share into Social Security by lifting the wage cap, and improve the Special Minimum Benefit for Social Security recipients which would help low-income workers stay out of poverty. 

Is this something you can get on board with? Join us in urging lawmakers to enact the Social Security Expansion Act. You can show your support by signing our petition.