Our nation’s seniors work their entire lives to earn Social Security, and they depend on Social Security for a dignified retirement. For many, Social Security isn’t just a luxury; it’s a necessity. In fact, Social Security provides more than half of monthly income needs for 61 percent of its recipients.
But many seniors know that Social Security benefits don’t match their economic reality. The cost-of-living adjustments (COLA) that Social Security recipients depend upon aren’t keeping pace with the actual expenses of most seniors. In 2017, seniors received a mere 0.3 percent increase to their COLA (that rounds down to 0 percent). And if you think that’s a pittance, 2016 was even worse. For just the third time since Social Security was created, America’s seniors received no cost-of-living adjustment at all last year. This trend is unacceptable, and it exists because the formula the Social Security Administration uses to calculate COLAs doesn’t reflect the way seniors live.
Currently, COLAs are calculated using the Consumer Price Index for Urban Wage Earners (CPI-W). This method reflects the spending habits of younger workers who spend more money on things like consumer goods and electronics. Seniors and retirees don’t spend nearly as much of their income on such items. Instead, they are more likely to spend their money on medical and housing expenses—costs that rise much faster than the CPI-W calculation reflects. When the cost of consumer goods goes down, the COLAs that seniors receive from Social Security are dragged down with it, even if seniors are much less likely to see any savings. This approach is hurting seniors and costing them money.
Between 1982 and 2001, living expenses for seniors rose higher than the CPI-W calculation, yet seniors never received that extra benefit. It’s simply unreasonable to ask our seniors, who have paid into Social Security for decades and worked their entire lives to enjoy their golden years, to settle for a COLA that’s less than what they’ve earned. That’s why we’re taking action.
Congressman John Garamendi (D-CA) introduced H.R. 1251—The Fair COLA Act of 2017—in February. This bill would change the current price index used to calculate COLAs to one tailored around the lives and needs of retirees: the Consumer Price Index for the Elderly (CPI-E). This index actually reflects how retirees spend their money – especially in health care and housing. This commonsense proposal will help benefits keep up with costs and make Social Security work better for the people it serves. This bipartisan bill already has 33 co-sponsors – Republicans and Democrats who understand the current calculation is unfair.
Americans everywhere agree: Social Security is not an entitlement; it is a benefit seniors earn through decades of work building our nation’s economy. Seniors and retirees deserve to have a program that evolves along with their cost of living, and Congress can take a very simple step to make that a reality.