New Bill Targets Social Security COLA Formula
A new bill would change the formula of Social Security’s cost-of-living-adjustment (COLA) to help seniors afford costs throughout retirement.
The “Boosting Benefits and COLAs for Seniors Act,” introduced by Sens. Richard Blumenthal (D-CT), Kirsten Gillibrand (D-NY), Ruben Gallego (D-AZ), and U.S. Rep. Nikki Budzinski (D-IL), would direct the Social Security Administration (SSA) to consider adjusting benefits based on the Consumer Price Index for the Elderly (CPI-E) instead of the Consumer Price Index for Urban Wage Earners (CPI-W), depending on whether benefits would increase.
“This overdue measure makes necessary adjustments to Social Security benefits—more accurately accounting for rising prices and inflation—to better support older Americans,” said Sen. Blumenthal in a statement. “Our nation’s seniors are struggling to afford basic necessities like food, medication, and clothing, and the overall cost of living index may not reflect their particular needs. This legislation ensures that older Americans have the support they deserve to live with dignity.”
One of the largest differentiators with the CPI-E formula is its heavy consideration of medical expenses along with other costs, say supporters of the change. The Senior Citizens League, a nonpartisan senior group, notes that the CPI-E is specifically designed to represent older Americans’ spending habits.
While the Social Security’s official COLA figure at 2.8% is anticipated to raise retiree benefits by $56 a month, much of that could be consumed by rising healthcare costs. So far, Medicare Part B premiums and several Part D plan premiums are on course to jump in the new year, experts say.
“Those costs are currently skyrocketing, with Medicare Part B premiums projected to increase by twice as much as last year,” said Nancy Altman, president of Social Security Works, an advocacy group. “The Boosting Benefits and COLAs for Seniors Act would correct this by incorporating a more accurate formula, the CPI-E.”
The legislation is cosponsored in the Senate by Sens. John Fetterman (D-PA), Bernie Sanders (I-VT), Peter Welch (D-VT), Sheldon Whitehouse (D-RI), Jack Reed (D-RI), Elizabeth Warren (D-MA), and Angela Alsobrooks (D-MD).
The bill is also supported by the American Federation of State, County, and Municipal Employees (AFSCME), Social Security Works, California Alliance for Retired Americans, Alliance for Retired Americans, Justice in Aging, National Committee to Preserve Social Security and Medicare, National Education Association, National Organization of Social Security Claimants’ Representatives, New York StateWide Senior Action Council, Strengthen Social Security Coalition, and Women’s Institute for a Secure Retirement.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
