Recipients of Social Security benefits in the United States could enjoy an increase in their monthly payments if a recent proposal to modify how the annual cost-of-living adjustment is calculated is successful.
This new proposal, introduced by Arizona Democratic Congressman Ruben Gallego, has been introduced in the House of Representatives and is designed to adjust benefits according to a more representative index for senior citizens.
Proposed Change to Inflation Measurement
The legislative proposal, called the Seniors’ COLA and Benefit Increase Act, suggests using the Consumer Price Index for Americans age 62 and older (CPI-E) to determine the annual COLA (Cost of Living Adjustment) adjustment.
In contrast, the Consumer Price Index for Urban Wage Earners and Wage Earners (CPI-W), which has been criticized for not accurately reflecting the actual expenses faced by older adults, is currently used.
The COLA adjustment was initially implemented in 1975 and is based on economic data from the third quarter of each year. This year’s adjustment was 3.2%, significantly less than last year’s historic 8.2% increase, which translates to an increase of about $50 per month for the average beneficiary. This rate of adjustment is considered insufficient by many, given current inflation.
Criticism of the Current System
Representatives of senior citizen organizations, such as Roman Ulman, president of AFSCME’s Arizona Chapter 97 Retirees, have expressed concerns about the current COLA system.
Ulman noted that the index used does not adequately capture the inflation faced by seniors, particularly in critical areas such as health care. The proposal to switch to the CPI-E seeks to have increases more accurately reflect the costs incurred by seniors, especially for health care, food and housing.
Support for Gallego’s bill is notable, with endorsements from the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans and the AFL-CIO.
In parallel, Pennsylvania Democratic Senator Bob Casey has introduced similar legislation in the Senate, indicating a bipartisan interest in adjusting the COLA calculation method to more effectively benefit senior citizens across the country.