After last year’s astronomically high inflation, this year has been much more manageable, albeit prices are still high for basic necessities, especially groceries. While lower inflation is great news for American consumers, it means seniors will likely see a significantly smaller Social Security cost-of-living adjustment (COLA). According to an article by Yahoo! Finance, some experts are predicting a COLA of less than 2 percent. That would be the smallest adjustment since pre-pandemic.
In comparison, because of last year’s soaring inflation rate, the 2023 COLA is 8.7 percent — that’s the highest in more than 40 years.
The COLA is determined every October by the Social Security Administration (SSA). The agency bases its calculation on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in the third quarter compared with the prior year. Early indications, based on February inflation data, show the 2024 COLA will likely be less than 3 percent and could fall into the 2 percent or even lower range by the third quarter if the 12-month average continues to decline.
Better COLA Calculator
The Seniors Trust believes seniors would be better off if we used the Consumer Price Index for the Elderly, or the CPI-E, instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W, to calculate COLA. The CPI-E index 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.
The change would be made if Congress enacts the Social Security Expansion Act. Along with setting a fairer COLA, this landmark piece of legislation will also increase benefits by $200 per month and secure Social Security solvency for another 75 years.