While retirement means getting away from the workforce, it also means having a fixed monthly income. To help account for inflation, the Social Security Administration calculates an increase in beneficiaries’ payments.

Unfortunately, this increase is not all it’s cracked up to be.

How Calculations Are Made

Cost-of-living Adjustment (COLA) calculations are made by following a specific formula. This formula utilizes the Consumer Price Index (CPI) to gauge how much inflation was seen over the past year. More specifically, the government relies on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

This index does not reflect the spending habits of retirees, the very people the COLA is meant to help. Instead, the CPI-W reflects the spending habits of urban and clerical workers, not retirees. Without information relative to retirees’ spending, the COLA calculations cannot accurately reflect their needs.

This is seen more than ever before — the COLA for 2022 was the largest in decades. However, this large increase does not account for the current rising prices of inflation. Because of this discrepancy, many senior citizens are left facing financial insecurity.

Additionally, this calculation does not include one of the most expensive costs senior citizens face — healthcare.

We Need Change Now

Retirees worked for years to earn their right to a comfortable retirement; unfortunately, this retirement is spent worrying about how to spend a fixed income that continually gets eaten away by various necessary costs.

Luckily, Senior Security Alliance understands just how essential benefit payments are for retirees. That’s why we’re taking a stand and demanding a better formula for annual COLA calculations.

By creating a better formula for COLA calculations, senior citizens nationwide will have access to the funds needed to ensure their healthcare needs are met.

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