According to TSCL’s research, Social Security benefits have lost over thirty percent of their purchasing power since 2000 due in large part to inadequate COLAs and rising health care costs. To address this growing issue, TSCL urges Congress to adopt legislation that would base the COLA on an inflation index specifically for seniors, like the Consumer Price Index for the Elderly (CPI-E).
The index that is currently used to measure inflation — the Consumer Price Index for Urban Wage Earners (CPI-W) — underestimates the inflation that Social Security beneficiaries experience since it does not give enough weight to expenses like health care or housing costs.
The CPI-E regularly puts the spending inflation for seniors at two-tenths of a percentage point higher than the rate at which the CPI-W increases. That may seem like an insignificant amount, but over a twenty-five-year retirement, COLAs do compound significantly. We estimate that a senior who filed for Social Security with average benefits over thirty years ago would have received nearly $14,000 more in retirement if the CPI-E had been used.
TSCL supports legislation like the CPI-E Act, the Guaranteed 3% COLA Act, the Seniors’ Security Act, and several other bills that would better protect the purchasing power of Social Security benefits. TSCL also supports legislation that would give beneficiaries a modest boost in benefits to help compensate for years of excessively low COLAs.