Why It’s Unfair That Workers’ Spending Habits Influence Retirees’ Benefits
America’s retirees will be keeping a close eye on what happens in Washington, D.C., today. That’s because the Bureau of Labor is set to announce the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for September. The CPI-W measures the change in prices for common consumer goods and services. As a story by WAVY explains, this number is critical because it — along with the figures from July and August — is used to calculate next year’s Social Security cost-of-living adjustment (COLA).
Based on current CPI-W data, the 2024 COLA increase is projected to be significantly less than the 8.7 percent increase given to beneficiaries in 2023. That was the largest COLA in about 40 years. Experts are predicting a 3.2 percent COLA for next year. The truth will be told when the Social Security Administration officially announces the 2024 COLA on October 13.
Better COLA Calculator
Currently, the formula used to calculate COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W. The Seniors Trust believes the better option is to use the Consumer Price Index for the Elderly, or the CPI-E, instead. That 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. It is believed that this COLA calculator would provide a much fairer cost-of-living adjustment for retirees.
The change to adopting the CPI-E 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. That’s critical because the Social Security trust fund is facing a deficit and could have to drastically reduce benefits by the year 2023.
