How Social Security COLAs Came To Be
By now, all Social Security recipients should have received their first benefit check containing 2023’s 8.7 percent cost-of-living adjustment (COLA). It’s the biggest benefit increase in more than 40 years. That’s due to last year’s record high inflation. Interestingly, when the Social Security system was created, there was no plan to adjust benefits — they were just a set amount.
Pre-COLA
According to the Social Security Administration, the first benefit payment was to Ida May Fuller in January 1940. The retired schoolteacher and legal secretary received $22.54 per month and that was supposed to be fixed for the remainder of her life.
That only lasted 10 years. Congress legislated an increase in benefits as part of the 1950 Amendments. At that time, Fuller saw her monthly check increase to $41.30. Two years later, a second increase was legislated. Together these two increases almost doubled the value of Social Security benefits for existing beneficiaries.
From that point on, benefits were increased only when Congress enacted special legislation for that purpose.
Adopting COLA
Everything changed in 1972 when legislation was enacted to provide automatic annual cost-of-living allowances based on the annual increase in consumer prices. No longer did Social Security recipients need to wait for an act of Congress to receive a benefits boost. And no longer did inflation drain value from Social Security benefits.
New COLA Calculator Needed
The Seniors Trust believes it’s time for another act of Congress. We want lawmakers to enact the The Social Security Expansion Act. It calls for using the Consumer Price Index for the Elderly (CPI-E) to calculate Social Security cost-of-living adjustments (COLAs) instead of the Consumer Price Index for Urban Wage Earners (CPI-W) used currently. The CPI-E takes the unique spending habits of seniors into account — particularly regarding the cost of healthcare and housing — and offers a more realistic COLA for retirees.
Please sign our petition to Congress and join us as we strive to improve the lives of senior citizens through passage of the Social Security Expansion Act.
