Why We Need a New Social Security COLA Calculator
The Social Security Administration is expected to announce its 2024 cost-of-living adjustment (COLA) around mid-October. According to a report by Yahoo! Finance, there is speculation that because inflation has been falling, next year’s COLA could be substantially lower than we saw this year. Some experts think it could be as low as 2 percent. That’s a sharp decrease from the 2023 COLA which was a record-setting 8.7 percent — the highest COLA in 40 years.
COLA History
We didn’t always have annual COLAs. When Social Security was first established, beneficiaries received the same amount every year. According to the Social Security Administration, it was not until the 1950 Amendments that Congress first legislated an increase in benefits. A second increase was legislated in 1952.
From that point on, benefits could only be increased if Congress enacted special legislation for that purpose. However, in 1972, legislation was changed to provide annual cost-of-living allowances based on the annual increase in consumer prices. That took effect in 1975.
COLA Calculator
Currently, the COLA formula it 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. 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.
