Why the Summer Months Are So Important to Social Security Recipients
In about six weeks, the Social Security Administration will announce the 2027 cost-of-living adjustment (COLA). It’s designed to help Social Security beneficiaries maintain their purchasing power by increasing benefits when consumer prices rise.
According to an article by The Street, when calculating the COLA, the Social Security Administration (SSA) doesn’t average inflation over the entire year but rather just the third quarter — July, August and September.
The COLA formula is based on the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It compares third quarter figures to the third-quarter average from the previous year. If prices have increased, then Social Security beneficiaries receive a COLA reflecting that change.
Because of this system, the inflation readings released over the summer are the most important ones to look at. The article points out that even modest changes in inflation during July, August, or September could move the final COLA estimate higher or lower.
CNBC reports that after reviewing July inflation data, experts are predicting a 3.4% to 3.6 percent COLA. Although that’s lower than earlier estimates, it’s still higher than this year’s 2.8 percent COLA.
The official 2027 COLA will be announced on October 14th.
Call for a New COLA Calculator
Senior advocates, including The Seniors Trust, believe seniors would be better served if the Consumer Price Index for the Elderly (CPI-E) was used instead of the current Consumer Price Index for Wage Earners (CPI-W). The CPI-E 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. One of its main points 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 will 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.
