Why a Bigger COLA Could End Up Costing Retirees More Money Next Year
Social Security recipients are poised to get the biggest cost-of-living adjustment (COLA) in about 40 years because of this year’s surging inflation rates. While bigger monthly benefit checks may sound like a good thing, it might really be the devil in disguise.
As a Fox Business report explains, that’s because retirees owe taxes on their Social Security benefits if their income — including Social Security — exceeds $25,000 for singles and $34,000 for married couples. With the 2023 COLA expected to be over 10 percent, more seniors will be pushed into a higher tax bracket. This could end up costing them more money and negate their COLA benefit boost.
No one wants to pay more taxes, but fixing this situation will take time and work. However, there is something that can be done right now to right the wrong that has been levied on retirees for generations. It’s time we adopt a better system for calculating COLA that actually reflects retirees’ spending habits.
New COLA Calculator
Currently, the COLA formula 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.
Securing Social Security
Changing the COLA calculator is just one of the main tenets of the Social Security Expansion Act. This landmark piece of legislation would also provide retirees with an immediate Social Security benefits boost. It calls for increasing monthly benefits by about $200 on average, which would help put more money in the pockets of deserving retirees.
Show Your Support
If you support The Seniors Trust mission to expand Social Security benefits for seniors — by recalculating COLA — and buttressing its long-term solvency, please add your name to our petition to Congress.
