Why COLA Won’t Save Retirees from Inflation
Inflation is out of control. Everything from Gas prices to food costs is skyrocketing leaving Americans unsure where to turn. To make matters worse, Social Security COLA is supposed to address this issue but fails miserably. If American seniors cannot rely on reasonable cost of living adjustments, something needs to change in the Social Security System.
What is COLA?
The Cost of Living Adjustment (COLA) is designed to help those who receive Social Security benefits to stay current with costs as inflation climbs. The idea is that every year, an increase will be determined based on projected inflation rates. In theory, this is a good way to ensure that recipients can afford the things they need no matter how the economy changes. Unfortunately, the system does not work so well in practice.
How COLA is Determined.
The yearly adjustment is decided based on projected inflation for the following year, however, the methods used are problematic. The estimated inflation rate is based on increases in the Consumer Price Index. This does not account for some of the biggest costs for seniors. The Cost of Living Adjustment came with a 1973 piece of legislation intended to ensure benefits keep pace with inflation. In 2022, COLA is failing.
Why Benefits Don’t Go Far Enough for Seniors
Inflation is out of control. Of course, any increase in benefits should help. Unfortunately, however, COLA does not consider real costs for seniors. Even before prices for goods and services got out of control, older Americans faced extreme costs. Average medication costs, for example, increase at a rate far higher than standard inflation. Furthermore, Medicare premiums increased 15.5 percent in 2022 while COLA only went up 5.9 percent. Clearly, seniors need more.
How New Legislation Could Help
While Social Security does not do enough for older Americans, there is hope. The bill we call The Greatest Generation Benefits Act would give many seniors the benefits they need. Under this legislation, seniors over age 82 would receive a significant monthly increase plus a guaranteed annual boost every year after. Learn more about this legislation and sign our petition here.
