Sponsor: Social Security benefits have not kept up with costs and older adults are left struggling to afford food, medications, clothing, and other necessities. Image: Monster Ztudio/Shutterstock.com
Newly introduced legislation in the Senate (S-3974) would boost inflation adjustments to Social Security by basing them on a consumer price index measure geared toward retiree spending patterns rather than on the current general measure of price increases.
While the bill specifically addresses that program, it presumably also would extend to COLA adjustments under the federal FERS and CSRS retirement systems, which uses the same formula of the change in the average CPI-W (consumer price index for urban wage earners) of the third calendar quarter of one year to the next.
Switching to use of the CPI-E (the “consumer price index for the elderly”—with that term in this case encompassing anyone age 62 and above)—has been proposed for many years and is a long-time priority of retirement advocacy groups, including the National Active and Retired Federal Employees Association.
“Social Security benefits have not kept up with costs and older adults are left struggling to afford food, medications, clothing, and other necessities,” said main sponsor Sen. Senator Bob Casey, D-Pa., chairman of the Special Committee on Aging. The CPI-E “is more reflective of the actual costs incurred by older adults; for example, within CPI-E, medical expenses are weighted more heavily than they are in CPI-W,” he said.
Technically, the bill would require use of the higher of the two in a given year, but as a practical matter that almost always would mean the CPI-E. That index consistently shows a higher reading, on the order of upwards of a percentage point, than the CPI-W.
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