Cost-of-Living Adjustment (COLA) sounds like a great way to keep recipients’ income in line with inflation. The idea is, if costs go up, benefits must go up too. Of course, this is true. However, for older Americans who rely on Social Security, these annual adjustments are simply not enough.
How COLA Should Work
The Cost-of-Living Adjustment should make things much more fair for retirees struggling with price increases across the board. Just looking at prices of food and gas, we know that Social Security checks from a year ago would not go near as far today. That’s why, in principle, an increase based on Inflation is a good common sense idea. Unfortunately, the reality is not so simple.
How COLA Does Work
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 it comes to 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.
Since COLA does not accurately account for the financial situation of many retirees, continuing to suggest that it does is actually hurting those who cannot afford to live on Social Security. If we keep pretending COLA is the answer, we’re not making real change, and Americans continue to suffer. 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.