COLA Doesn’t Help Seniors as Much as You May Think

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Cost-of-Living Adjustment (COLA) sounds like a great way to keep recipients’ income in line with inflation. The idea, of course, is that if costs go up, benefits go up too. Unfortunately, this is not quite how it seems to work. For older Americans who rely on Social Security, annual Social Security adjustments are simply not enough to compete with inflation. 

What COLA Should Do for Older Americans

The Cost-of-Living Adjustment should make things much fairer for retirees struggling with price increases across the board. Just looking at the prices of food and gas, we know that Social Security checks from a year or two ago would not go near as far today. That’s why, in principle, an increase based on Inflation is a good common sense idea. But the reality is not so simple. 

How COLA Fails

The annual adjustment is based on projected inflation rates for the following year. Each October, the COLA is announced for the next calendar year based on price trends. The problem is that these pricing factors often leave seniors out in the cold when calculating costs. Projected inflation is based on the Consumer Price Index (CPI). The CPI does not include health insurance premiums, skyrocketing medication costs, or other financial pain points for seniors. The simple truth is that CPI and COLA do not accurately reflect costs for older Americans.

COLA’s failure is doing real damage to those who cannot afford to live on Social Security alone. There is hope, however. A bill we call The Greatest Generation Benefits Act could provide a substantial increase for seniors. Read more about this legislation and check out our petition here. If you want to keep up with this and more, be sure to follow The Greatest Generation on Facebook and Twitter