Millions of seniors nationwide rely on the financial support they receive each month via their Social Security benefits checks.These payouts have failed to keep up with inflation and the escalating prices of basic goods and services over time.
- Retirees have in fact lost significant buying power in the past two decades, all while they tend to face steep increases in health care costs as they age.
- As of 2023, Social Security benefits experienced one of the biggest losses of purchasing power – 36 percent – since 2000.
- For more information “2023 Social Security Loss of Buying Power Study”
The Cost-of-Living Adjustment (COLA)
At the end of each year, the Social Security Administration (SSA) informs Social Security recipients about how much they can expect to see in their payouts for the forthcoming year. Benefits typically undergo some level of change based on the SSA’s annual cost-of-living adjustment (COLA).
- In 2024, COLA rose slightly, by 3.2 percent. For the average retiree, that equates to receiving about $59 more per month compared with 2023.
- The year prior to that, COLA had increased by 8.7 percent.
- Current predictions for 2025’s COLA are coming in at about 2 percent.
Today, COLA calculations are based on a metric known as the Consumer Price Index for Urban Wage Earners (CPI-W). This is where the recently proposed legislation focuses on making a change.
Boosting Benefits and COLAs for Seniors Act
In late March 2024, U.S. Senator Bob Casey introduced the Boosting Benefits and COLAs for Seniors Act. The Act changes the formula that the SSA uses to calculate Social Security benefits for older adults. Specifically, it proposes using the Consumer Price Index for the Elderly (CPI-E), which would better reflect the specific types of costs seniors face.
Senator Gillibrand, a cosponsor of the legislation, explains that this change would “factor the high cost of health care into Social Security benefits calculations.” In turn, this would mean bigger payouts for seniors and, she adds, would “help make sure recipients aren’t forced to choose between paying for their medication and buying other necessities.”