Two Facts Everyone Receiving Social Security Benefits Needs to Know About COLAs
Social Security benefits are not stagnant. They can fluctuate from year to year depending upon factors such as inflation. According to an article by The Motley Fool, “beneficiaries typically receive an annual adjustment in their benefits to help keep up with rising costs, known as the cost-of-living adjustment, or COLA.”
While that’s fairly common knowledge, there are aspects of how COLA works that most people don’t understand. Here are two critical facts you need to know:
Social Security COLAs are only based on third-quarter inflation: Monthly inflation reports are important indicators, but the COLA calculator only takes into account three months of inflation data — July, August, and September. The article notes that the Social Security Administration looks at inflation data for these three months and compares it with the same three months from the previous year.
Social Security COLAs use the CPI-W: It might seem strange, but Social Security retirement benefits are calculated using an inflation metric that tracks cost increases for working Americans. The article explains that Social Security uses the CPI-W, which stands for the Consumer Price Index for Urban Wage Earners and Clerical Workers. However, there is a senior-specific inflation metric called the CPI-E, which stands for the Consumer Price Index for the Elderly, which better takes into account the higher expenses seniors face, such as for healthcare.
All of us here at The Seniors Trust 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.
