Three Things You Might Not Know About Social Security COLAs
If you receive Social Security, you are probably familiar with its annual cost-of-living adjustment (COLA). It helps ensure benefits keep up with inflation.
But there’s a lot more to it than that. An article by Finance Buzz points out three things you should know about Social Security COLAs.
COLAs are not based on senior-specific expenses. Social Security COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks the spending patterns of working Americans. Senior advocates, like those of us here at The Seniors Trust, believe the Consumer Price Index for the Elderly (CPI-E) is a better choice. It reflects actual senior spending. This change would protect seniors’ buying power. Experts say recipients have lost 13.7 percent of their buying power over the past decade.
COLAs are based on third-quarter data. Social Security COLAs are based on CPI-W data from the third quarter. What happens earlier in the year doesn’t matter. The COLA for the following year is announced in October, after the September CPI-W data is released and the COLA can be calculated.
There’s no such thing as a negative COLA. A COLA is not guaranteed each year. The article explains that when the CPI-W increases from the third quarter of the current year compared to the previous year, then benefits are eligible for an increase. When there’s no rise in the CPI-W year over year, benefits remain flat. However, if the CPI-W decreases from year to year, benefits do not decrease.
Join Our Efforts
The Seniors Trust is calling on Congress to enact the Social Security Expansion Act and ensure a fairer COLA for retirees. 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.
