“While we are grateful that Social Security is the only major retirement program with a built-in cost-of-living adjustment, the current formula for determining COLAs is inherently flawed — because it does not truly reflect the increase in prices for the goods and services that Social Security beneficiaries rely on. The National Committee has been advocating for a more accurate COLA formula for more than thirty years.
The 3.2% 2024 COLA represents a modest $59 increase in the average monthly benefit for retired workers, and that’s before deducting the projected rise in the 2024 Medicare Part B premium of about $10 per month. That means the average retirement beneficiary will receive a net COLA of about $50. That is not enough for a tank of gas or half a week’s worth of groceries in many states. The net COLA will barely cover one brand-name prescription co-pay for some patients.
The 2023 COLA of 8.7% was unusually high — the highest in some 40 years. But post-pandemic inflation was also at record highs. Historically, COLA’s have been relatively low. In fact, the COLA has been ZERO three times since 2009.
Seniors deserve an accurate COLA formula that accounts for the impact of inflation on their living costs. That is supposed to be the entire purpose of a COLA. The current formula (CPI-W) measures the impact of inflation on urban wage earners and clerical workers. How is that a reasonable formula for seniors? Seniors have different spending patterns than urban wage earners & clerical workers.
Older Americans spend more than other groups on expenses like housing, long-term care, and medical services. We strongly favor the adoption of the CPI-E (Consumer Price for the Elderly) for calculating COLAs. The CPI-E would more accurately reflect the impact of inflation on the goods and services seniors need.
The CPI-E is included in both major pieces of legislation to expand and protect Social Security that have been introduced in this Congress: Bernie Sanders’ Social Security Expansion Act and Rep. John Larson’s Social Security 2100 Act. We have endorsed both of those bills as part of our commitment to boosting Social Security for current and future retirees. It’s past time for Congress to act.” – Max Richtman, President and CEO, National Committee to Preserve Social Security and Medicare