Phoenix, Arizona – A new initiative is in the works to potentially increase Social Security payments for seniors. The proposal aims to revamp the current method of determining the cost-of-living adjustment (COLA) to better address seniors’ concerns about inflation and rising medical expenses.
The yearly COLA increase plays a crucial role in ensuring that Social Security beneficiaries, particularly retirees, are able to maintain their purchasing power in the face of inflation. This adjustment, which is typically announced each January, helps offset the impact of rising living costs, although the increase is often partially absorbed by Medicare expenses.
Since the enactment of the Social Security Amendments in 1972, annual benefit adjustments have been tied to the consumer price index (CPI), a key indicator of inflation in the United States. However, concerns have been raised about the adequacy of the current CPI measure in accurately reflecting seniors’ spending patterns, especially in areas such as healthcare.
Representative Ruben Gallego introduced the Boosting Benefits and COLAs for Seniors Act in the US House, aiming to use the Consumer Price Index to calculate the annual COLA adjustment for Americans aged 62 and older. This move seeks to address criticisms of the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as not fully capturing seniors’ actual expenses.
One of the primary issues with the current COLA formula, as pointed out by Roman Ulman of the AFSCME Arizona Retirees Chapter 97, is the lack of consideration for seniors’ inflation experiences, particularly in healthcare. Ulman emphasizes the importance of a more accurate inflation measure, such as the CPI-E, to reflect seniors’ expenses more comprehensively, including housing, food, and medical care.
Recent inflation figures have led to revised projections for the 2025 COLA, now expected to reach 3 percent due to higher-than-anticipated inflation rates. Earlier predictions had estimated a lower increase, highlighting the volatility of inflation and its impact on Social Security payments. The government is likely to adjust Social Security payments accordingly to account for the rising costs of essential goods and services faced by seniors.