By Daisy Brown, TSCL Legislative Liaison
It’s been two years since prices started a stratospheric climb in 2021 at a pace that hasn’t been seen in more than 40 years. Although Social Security recipients received two of the highest cost-of-living-adjustments (COLAs) since 1982, 5.9% in 2022 and 8.7% in 2023, it remains to be seen whether retirees can recover financially. New research released by TSCL indicates that COLAs fell short of actual inflation by an estimated $1,054 from 2020 to 2022.
Recently moderating inflation and longer-term price trends suggest the COLA for 2024 will plummet, assuming that a COLA will be payable at all. TSCL is gearing up to ask Members of Congress to enact legislation this year that protect Social Security recipients in three ways:
- By providing a minimum annual COLA guarantee of no less than 3%,
- By providing a one time $1,400 payment to help Social Security recipients recover from the shortfall due to inflation out pacing the COLA over the past two years, and
- By adjusting the income threshold that subjects a portion of Social Security benefits to taxation, allowing retirees to keep more of their benefits.
Some Members of Congress have recently vowed to call any legislation that increases federal spending “inflationary.” We would like to remind all Members of Congress that 94% of Social Security benefits are financed through payroll taxes withheld from the earnings of workers and the taxation of Social Security benefits. A third source of income comes from the interest earned by special non-marketable bonds (I.O.U.s) held by the Social Security Trust Fund.
That’s right. By law, the Social Security Trust Fund has loaned money to the rest of the federal government for decades and now the interest payment, which will account for about 6% of program funding this year, is due. In the past, some policymakers have misleadingly stated that seniors are “overpaid” because the COLAs are too generous. Data proves this is simply not the case.
The fact that Social Security COLAs fall short is known by Members of Congress. They hear it from their older constituents, organizations like The Senior Citizens League (TSCL), who confirm it with the data. That fact is also understood by younger family members who are trying to ensure their elders have the essentials needed to live safely, and stay fed and healthy, often at the expense of their own jobs and savings.
Please help us educate the public and lawmakers about the facts of the matter. We feel the data clearly indicate that Social Security benefits fell short of inflation over the past two years. How do you feel about your cost-of-living-adjustment (COLA)? Take our 2023 Senior Survey at https://seniorsleague.org/2023seniorsurvey/.