What a Flat-Rate Social Security COLA Would Mean to You
With the Social Security trust fund predicted to run dry in about five years, the pressure is on to find a fix. One idea gaining traction is a flat-rate Social Security cost-of-living adjustment (COLA).
According to Index Box, this idea was first floated in 1987, but it’s seeing a resurgence of interest. A Flat-Rate COLA would set the annual COLA “at the dollar amount received by a beneficiary at the 20th percentile of earnings.”
An article by USA Today explaining the concept says advocates believe “by doing this, lowest-income beneficiaries would receive larger benefits, poverty would be reduced, and Social Security’s insolvency would be delayed.”
On the other side, critics of the flat-rate COLA “calculate that 80 percent of beneficiaries would see the purchasing power of their benefits erode year after year, leaving many in or near poverty.”
The articles say that for many Social Security recipients, a flat-rate COLA would result in smaller COLAs — as much as $34 less per month in 2026 — and lower buying power.
Fortunately, there are better COLA solutions out there. The Seniors Trust is calling on Congress to enact the Social Security Expansion Act, which would ensure a fairer COLA for all retirees by using the Consumer Price Index for the Elderly (CPI-E) rather than the current Consumer Price Index for Wage Earners (CPI-W) to calculate COLA, as the CPI-E index better reflects how inflation actually impacts the typical retiree based on seniors’ spending habits.
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.
