Chances are you’ve heard the term cost-of-living adjustment (COLA), especially if you receive Social Security. The COLA helps ensure your benefits keep up with inflation.
An article by Finance Buzz says that’s only one aspect. It explains three other 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 out on 13.7% of their buying power over the past 10 years.
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.
Council of Seniors Is Here To Help Older Americans
The Social Security cost-of-living adjustment (COLA) has not always been fair to seniors. All of us here at the Council of Seniors want to improve retirees’ financial futures and ensure they receive their full Social Security benefits. We are working with members of Congress to introduce the “Social Security Restitution Act.” It would provide an estimated $970 payment to every retired worker receiving Social Security benefits to help offset years of inadequate COLAs.
Please take a moment and sign our petition today to show your support.