Social Security Benefits Lose 13.7% Buying Power in 10 Years as COLA Formula Misses Retiree Costs
Updated
Updated · The Motley Fool · Jul 6
Social Security Benefits Lose 13.7% Buying Power in 10 Years as COLA Formula Misses Retiree Costs
3 articles · Updated · The Motley Fool · Jul 6
Summary
A Senior Citizens League report found Social Security benefits lost 13.7% of their purchasing power over the past decade, despite annual cost-of-living adjustments.
The erosion stems from COLAs being tied to CPI-W, which tracks working households and gives less weight to healthcare costs that consume a larger share of retirees' budgets.
Advocates want COLAs based on CPI-E, a Bureau of Labor Statistics index for households age 62 and older that generally shows inflation more in line with seniors' expenses.
Lawmakers have hesitated because CPI-E remains an experimental index and because larger COLAs could worsen Social Security's financing strain, with broad benefit cuts possible in about six years.