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The Social Security cost of living adjustment (COLA) is tied to an old inflation index
Our President & CEO, Max Richtman, told NPR’s Scott Horsely on “All Things Considered” that the current formula for calculating Social Security COLAs — the CPI-W — is flawed. If Social Security used the Consumer Price Index for the Elderly, the 2024 COLA would have been at least 4% rather than 3.2%. For example, the CPI-W index overweights transportation costs, even though most retirees don’t drive as much as people who are commuting to work or taking kids to school. And at the same time, it underweights medical costs, even though that’s a major out-of-pocket expense for a lot of seniors.
The Post’s Catherine Rampell Gets it Very Wrong on Social Security
By Max Richtman,
NCPSSM President & CEO
Columnist Catherine Rampell’s column, Why We’re Borrowing to Fund the Elderly While Neglecting Everyone Else, demonstrates a fundamental misunderstanding of how Social Security works. Social Security does not borrow money. Workers’ payroll taxes go into a dedicated trust fund that earns interest and actually helps to fund other federal spending – just like any other government bondholder. By misrepresenting the way Social Security is funded, Rampell sets up a false choice between seniors’ earned benefits and federal spending on everyone else. Read more.
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