Social Security COLA Could Be Higher Under Proposed Changes
Summary
The 2027 Social Security cost-of-living adjustment (COLA) is set at 3.6 percent. Lawmakers have proposed changing the way COLA is calculated to better reflect the expenses of older Americans, which could increase benefit amounts in future years.Key Facts
- The current COLA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to measure inflation.
- Two bills propose using the Consumer Price Index for Elderly Consumers (CPI-E), which better reflects costs faced by seniors like healthcare and housing.
- The Boosting Benefits and COLAs for Seniors Act would use the higher of CPI-W or CPI-E to calculate COLA increases.
- The Social Security Expansion Act would replace CPI-W entirely with CPI-E and includes other Social Security benefit improvements.
- Research suggests switching to CPI-E could add thousands of dollars to retirees’ benefits over 25 years.
- The Bureau of Labor Statistics would publish an official older-consumer inflation index if these proposals pass.
- Seniors spend a larger part of their income on costs like medical care and housing, which rise faster than other expenses.
- The changes aim to better protect Social Security beneficiaries from rising costs they actually face.
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