How Next Year’s Social Security COLA Compares
The Social Security Administration has announced that its 66.7 million beneficiaries will receive a 3.2 percent cost-of-living adjustment (COLA) in 2024. While that might seem poor compared to this year’s 8.7 percent COLA, according to the Motley Fool it’s actually above average. The average annual benefit increase over the past 20 years has been 2.6 percent.
At issue is the way Social Security calculates its COLA. The article notes, “Due to inherent flaws with the program’s inflationary tether, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), important expenses, such as shelter and medical care, are being underweighted. As a result, the purchasing power of Social Security income has plunged by 36 percent since January 2000.”
The Seniors Trust supports the Social Security Expansion Act, which calls for using the use the Consumer Price Index for the Elderly, or the CPI-E, to calculate the annual COLA, rather than the CPI-W currently used. The CPI-E specifically tracks the spending of households with people aged 62 and older. It places greater value on rising costs of expenses unique to seniors such as housing, healthcare and medicine. This would provide a much fairer cost-of-living adjustment for retirees.
