Social Security recipients saw a 1.3% cost of living adjustment (COLA) this year. On average, that equates to about an extra $20 in each monthly benefit check. It’s certainly not enough money to make up for the rising costs seniors face, especially when it comes to healthcare and housing. That’s why The Seniors Trust is pushing for passage of the Social Security Expansion Act. This landmark piece of legislation calls for using the Consumer Price Index for the Elderly (CPI-E) to calculate Social Security cost of living adjustments (COLAs) instead of the Consumer Price Index for Urban Wage Earners (CPI-W) used currently. The CPI-E takes into account the unique spending habits of seniors and offers a more realistic COLA for retirees.
Rising Costs and Inflation are Outpacing COLA
The problem is the Social Security COLA is not keeping up with the growing expenses seniors face. The Motley Fool writes that between 2000 and 2020, Social Security benefits lost much of their purchasing power. Retiree must spend more money today to buy the same amount of goods and services they bought in the past.
One solution is to switch to the CPI-E when calculating Social Security COLAs. This index puts more weight on medical and housing costs, which is where retirees spend the bulk of their income. But, even making this switch, it’s apparent we need to do more to help our seniors.
More Help Is Needed
The bottom line is that a lot of work needs to be done to ensure our seniors are taken care of during their retirement years. In addition to changing the COLA formulation, if it passes, the Social Security Expansion Act will increase monthly benefits, greatly reduce senior poverty, and guarantee the long-term solvency of the Social Security program. You can help call on Congress to make this a reality by adding your signature to our petition to Congress. It is time real changes are made to protect the financial security of America’s seniors.