Phoenix, Arizona – American seniors may see changes coming to their Social Security benefits as a new bill proposed by Representative Ruben Gallego aims to adjust the formula used to calculate annual cost of living adjustments (COLA). This adjustment could potentially lead to an increase in benefit payments for seniors and other recipients.
COLA, an increase in benefits to counteract the impact of inflation, is crucial for ensuring that individuals can maintain their purchasing power as the cost of goods and services rise. The current method of calculating COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been criticized for not adequately addressing the rising costs faced by seniors, particularly in healthcare expenses.
The proposed Boosting Benefits and COLAs Act seeks to amend the Social Security Act to require the use of the Consumer Price Index for Elderly Consumers (CPI-E) in calculating annual COLA adjustments. This change aims to better reflect the inflation experienced by seniors, who often have unique costs compared to the general population.
Representative Ruben Gallego has raised concerns about the current COLA formula, highlighting the need to consider inflation in healthcare expenditures that disproportionately affect seniors. He argues that the CPI-W fails to fully capture the rising medical expenses faced by retired workers, leading to inadequate adjustments in Social Security benefits over time.
Seniors receiving monthly Social Security benefit payments are advised to consider how inflation impacts their COLA adjustments. Understanding the implications of cost-of-living adjustments over time and considering factors like relocating to areas with lower living costs can help seniors better manage their expenses.
Using cost-of-living calculators and creating personal budgets based on COLA adjustments can assist seniors in planning for everyday expenses and ensuring their Social Security benefits keep pace with inflation. The proposed changes to the COLA calculation method could potentially provide much-needed relief to seniors facing escalating living expenses in retirement.