Cooling Inflation Renews Call for a New Social Security COLA Calculator
Inflation is slowly beginning to recede. According to an article by Yahoo! Finance, U.S. consumer prices fell in June. This is the first dip since the early months of the pandemic. While that is good news for most of America, retirees are still feeling the pinch. That’s because the price of housing, healthcare, and utilities — major expenses for millions of seniors — continue to outpace the overall rate of inflation.
The article found that medical expenses are outpacing inflation and putting a huge financial burden on seniors. It cites that “Inpatient care rose 4.5 percent from a year ago, while outpatient care surged 7 percent. Home healthcare services have climbed 11.4 percent — roughly three times faster than overall inflation.”
Another concern is the cost of housing, which typically takes up about half of seniors’ budgets. And it’s not just mortgage or rent payments, expenses such as insurance, taxes, and utilities are taking a financial toll as well.
The expert Yahoo! spoke to summed it up well, stating: “Even though overall inflation is coming down, the standard of living for many older households is not improving, it’s declining.”
New COLA Calculator
To help combat inflation, Social Security provides for an annual cost-of-living adjustment (COLA). The problem is that COLA is calculated based on the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). However, this does not include many of the expenses retirees typically face.
Senior advocates such as The Seniors Trust believe the Consumer Price Index for Americans 62 years of age and older (CPI-E) would be a better formula, as it more accurately reflects the costs incurred by older adults, especially related to healthcare and housing.
The Social Security Expansion Act calls for adopting the CPI-E. Not only would this provide Social Security recipients with a fairer COLA, but this landmark piece of legislation also provides across-the-board benefits boost of about $2,400 per year and long-term Social Security solvency.
