Why Social Security COLAs Never Seem to Keep Up With Inflation
We are about four months away from learning what the Social Security cost-of-living adjustment (COLA) will be for 2027. The latest projections are 3.9 percent, and it could continue to inch up if inflation does not slow down.
A Yahoo! Finance article states that, even though the COLA is pretty much guaranteed to be larger than this year’s 2.8 percent, it will likely still not be large enough to keep up with inflation. And it typically never does.
The article notes that “COLAs have become less and less likely to match inflation over time. In the 1990s and 2000s, 60 percent of COLAs beat inflation. In the 2010s, only 40 percent did. Through the 2020s so far, only one COLA out of five (2023; 8.7 percent) has done so.”
A big part of the problem is the way COLA is currently calculated.
Calls for a Better COLA Calculator
Senior advocates, including The Seniors Trust, believe the Consumer Price Index for the Elderly (CPI-E) should be used to calculate the COLA instead of the Consumer Price Index for Wage Earners (CPI-W). This index shows how inflation actually impacts the typical retiree based on seniors’ spending habits.
We are calling on Congress to enact the Social Security Expansion Act. It 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 would 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.
