By Marielis Acevedo
25 Oct 2023, 11:32 AM EDT
80% of retirees in the United States believe that Congress should legislate to strengthen protection against inflation with a Cost of Living Adjustment (COLA) that is more in line with the economic reality of that population.
A recent survey by The Senior Citizens League found that the new 3.2% COLA on Social Security checks announced mid-month is insufficient to ensure members of this population make ends meet.
Although the new figure that applies from 2024 is above the 2.6% average of the past two decades; The request of retirees is that a COLA be applied that better reflects the economic challenges that inflation imposes on the members of this sector.
Since 1975, the measure the Department of Labor uses to calculate the COLA on Social Security checks is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The authorities compare the inflation levels between July and September of the current year with the same period but the previous year. However, this measurement does not consider the costs of retired households over 62 years of age.
This is why the entity asks the authorities to use the CPI-E, launched in 1983 and which measures consumption changes in households with members aged 62 and older.
“Failure to adequately protect Social Security benefits from the direct effects of inflation can lead to a loss in purchasing power over time and slow growth in Social Security benefit income during the retirement period,” it states. the organization in a statement dated October 13. “Older adults and disabled recipients spend their money differently than working young adults. “Retirees tend to spend a greater proportion of their income on housing and medical costs – two categories of expenses that tend to increase faster than general inflation.”
According to TSCL data, Social Security beneficiaries have lost approximately 36% of their purchasing power since 2000.
The CPI-E measure usually rises faster than the CPI-W most years, although there are notable exceptions, such as those reported in 2021 and 2022, when gasoline prices spiked.
The Social Security 2100 Act, introduced in the House of Representatives by Democrat John Larson (CT-1), would change how the COLA is determined by requiring the highest CPI-W or CPI-E at the time to do the calculation.
“If that were the law today, the COLA in 2024 would be almost a percentage point higher — 4% versus the 3.2% recently announced by the Social Security Administration (SSA),” estimated Mary Johnson, policy analyst at the Social Security Administration (SSA). Social Security for The Senior Citizens League.
Keep reading:
Social Security Checks with new COLA increase for 2024: six key facts
COLA 2024: Social Security beneficiaries who will receive first check with increase before January
Average increase amounts in Social Security checks under new COLA starting in 2024