Why the Social Security COLA Is a Double-Edged Sword
The Social Security cost-of-living adjustment (COLA) is often considered a double-edged sword. According to a report by The Motley Fool, that’s because even though a COLA increase means bigger benefits, the cost of living is also increasing.
Although designed to help offset the cost of inflation — that’s why seniors will see a 3.6 percent COLA increase in 2027 — they just can’t keep pace. Retirees are losing buying power year after year.
The article explains, “Benefits in 2026 are worth only about $0.836 on the dollar compared to 2016, meaning benefits have lost 13.7 percent of their purchasing power over the past decade because COLAs have not kept pace with real-world inflation.”
A Faulty Formula
One of the main reasons COLAs are not keeping up is because of how they are calculated.
The government uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the COLA, but that measures prices that aren’t reflective of a typical senior’s budget.
Senior advocates, including The Seniors Trust, believe a better formula would use the Consumer Price Index for Americans 62 Years of Age and Older (CPI-E), as it better reflects the actual expenses facing retirees, such as the high costs of healthcare.
We are calling on Congress to enact the Social Security Expansion Act. One of its main points calls for adopting the CPI-E as the COLA calculator, better ensuring that Social Security benefits keep pace with inflation.
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.
