It is no surprise that senior citizens rely on their Social Security benefits during retirement. In an attempt to help account for inflation, these benefits receive an annual adjustment. This adjustment, known as the annual cost-of-living adjustment (COLA), has been calculated using the same index for years. The index currently used is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
However, Think Advisor reports that a new bill has been introduced in an attempt to help create fairer and more accurate COLA calculations for retirees.
What is the bill?
This bill, the Fair COLA for Seniors Act of 2021, would replace the current use of the CPI-W for COLA calculations and use the Consumer Price Index for the Elderly (CPI-E) instead.
Why does this matter?
As the article explains, senior citizens rely on their Social Security benefits; for many, it is a large portion of their income. However, the annual COLAs don’t reflect the lifestyle senior citizens live, nor do they seem to accurately keep up with inflation.
In fact, The Motley Fool reports that Social Security benefits have seen an approximate 30% loss of purchasing power since 2000.
Creating more financial security
While we approve of the initiative, it is important to recognize that the bill introduced is not enough. Senior citizens deserve more financial security and, without accounting for healthcare costs, the COLA calculations will not allow this.
Senior Security Alliance is working to pass another bill, The Senior Citizens Bill of Rights.
Through this bill, senior citizens nationwide would be guaranteed seven rights. These rights will help provide retirees with a more financially secure future. Among these rights is right number 3; this right declares that calculations for the annual Social Security COLA increases must account for increases in healthcare costs.
With this right, senior citizens are provided with more finances that can be used toward healthcare costs, thereby allowing for more financial security. Join us in urging the politicians in Washington to pass our bill now.
