In the early days of Social Security, there was no accounting for inflation. Seniors suffered immensely by losing buying power as costs increased. Their benefits could only be increased when Congress enacted special legislation. All that changed about 50 years ago when forward-thinking leaders determined something needed to be done to account for inflation. They instituted an annual cost-of-living adjustment (COLA) provision as part of the Social Security Amendments in 1972. Automatic COLAs began in 1975.
2022 saw a record high COLA. At 5.9 percent this was the biggest COLA in decades. However, it is still not enough. Seniors are struggling to get by as inflation hovers around 7-8 percent lately. That means even though retirees received a generous benefits boost, they are losing precious buying power.
A report in USA Today found that many retirees are struggling financially these days as the costs of everything from groceries to gas continue to skyrocket.
The situation is particularly scary for the 40 percent of older Americans who live solely off of income from Social Security. This is precisely why it’s time our country adopts a new COLA calculator.
New COLA Calculator
The Seniors Trust is a strong supporter of The Social Security Expansion Act. It calls for using a different measure of inflation to determine COLA — one that more accurately reflects recipients’ real expenses.
We want to see the Consumer Price Index for the Elderly (CPI-E) used 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 the unique spending habits of seniors into account — particularly regarding the cost of healthcare — and offers a more realistic COLA for retirees.
While a fairer COLA would certainly help, the Social Security Expansion Act also calls for bigger benefits — about $65 a month on average. This is necessary to help further close the financial bind facing seniors on fixed income.
The Seniors Trust is not alone. Please show your support by signing our petition to Congress calling on lawmakers to enact the Social Security Expansion Act.