Although we are no longer in the pandemic (what a moment humanity lived, right?), the impacts of this global health and economic crisis continue to be felt in the bank accounts of workers and retirees across the United States, and this includes those receiving Social Security benefits.
When the League of Senior Citizens (an organization that analyzes the problems of the elderly) reviewed the March 2023 data, they found a really worrying fact: the cost of living adjustment (COLA) of Social Security for 2025 would be 2.6% (compared to the 1.7% projected the previous month). Such a low number could be a serious problem for these beneficiaries.
Why a Lower Social Security COLA Increase Could Be Bad News for Retirees
After the recent increases of 3.2% this year and 8.7% in 2023 in the monthly checks of Social Security beneficiaries, a new adjustment is expected. FOX Business News reports that the COLA has averaged 2.6% in previous years.
However, the Social Security Administration does not officially announce these adjustments based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) until mid-October. Shannon Benton, director of TSCL, commented that if the COLA increases by 2.6%, it would mean an increase of about $45, but notes that this would not represent a significant change in purchasing power.
A New Bill Could Change Social Security Benefits Forever
A new bill has been introduced by Arizona Rep. Ruben Gallego (D) that could forever change the way the COLA increase is calculated each year, potentially increasing checks for retirees and other Social Security beneficiaries.
The proposed legislation, called the Boosting Benefits and COLAs Act, seeks to amend Title II of the Social Security Act to require the Commissioner of Social Security to use the Consumer Price Index for Elderly Consumers (CPI-E) instead of the instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the annual COLA increase. In case the CPI-W exceeds the IPC-E, the former would be used instead of the latter for the calculation of benefits.
According to Gallego, the current formula does not take into account the specific costs that retirees have to face, which are different from the rest of the population, such as higher medical expenses as well as diets and special food choices, which increase their living costs.
“Rising costs mean Arizona seniors on Social Security see the real value of their benefits decrease,” Gallego said in a written statement last week after introducing the legislation. “My new bill puts more dollars in the pockets of Social Security recipients to pay their bills, get their medications, and pay for housing. It’s only right—Arizona’s seniors earned their Social Security benefits.”
This is not the first bill introduced regarding these concerns: a companion bill, presented by Senator Bob Casey (Democrat, Pennsylvania) aims to establish a new way to determine COLA increments, in favor of retirees and other beneficiaries. “Social Security is the promise of a safe and stable retirement…as the costs of basic goods and services for seniors rises, we cannot allow that promise to be broken,” Casey said in an official statement.
