Retirees are getting the biggest bump in Social Security benefits in decades. Thanks to a 5.9% cost-of-living-adjustment (COLA), the average monthly benefit will be $92 more next year. That might seem like a lot of money, but it’s really not when you consider how much things now cost. The COLA just isn’t keeping up with inflation.
An article in USA Today found that seniors have been faced with COLAs that have been too low for decades, which has had a cumulative effect resulting in a damaging loss of buying power. According to the article, “While benefits have gone up by 55% during the past 21 years, housing costs saw close to a 118% jump during the same period while healthcare costs were up 145%.”
Wrong COLA Calculator
The problem is that retirees tend to spend an overwhelming percentage of their income on housing and healthcare. Neither of these expenses are accurately accounted for when COLA is calculated.
Housing and healthcare expenditures are undercounted because the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is the metric used to determine how much the COLA should be each year. Senior spending habits differ vastly from those of younger working people. For years, seniors have been receiving COLAs that just can’t keep pace with the actual price increases they experience.
Seniors Are Special
The Seniors Trust strongly believes the time has come to change how Social Security COLA is calculated. It wants to see the Consumer Price Index for the Elderly (CPI-E) used, instead of CPI-W. It more accurately takes into account the unique spending habits of seniors, especially when it comes to higher costs for healthcare, medicine, and housing.
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 and shore up the long-term solvency of the program so that it remains intact for all retirees – today and tomorrow.
If you support this mission, please add your name to our petition to Congress.