2023 Social Security COLA Isn’t Enough for Seniors, Experts Warn

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From January, the cost of living adjustment for Social Security benefits will be introduced becomes 8.7%. That’s the biggest increase since 1981, when COLA reached a record high of 11.2%.

But not everyone thinks next year’s boost is enough to deal with continued inflation: 55% of retirees said COLA should have been higher for 2023, according to a poll by The Motley Fool.

They are not alone. Senior advocates argue that the consumer price index for urban wage earners and white-collar workers — the metric used to calculate annual adjustment — is not an accurate gauge of their economic needs.

Is the 2023 COLA enough?

This year’s COLA was 5.9%, itself a 40-year record broken only this year. But annual inflation was 7.7% for the 12 months ending October 2022.

In June it peaked at 9.1%.

The 2022 COLA was short by 48% through August, according to the nonprofit Senior Citizens League, meaning the average beneficiary was $417 short so far.

“We expect a continued deficit in 2023,” Senior Citizens League policy analyst Mary Johnson told CNET. “Inflation has come down significantly from a year ago, but we are still in a period of high inflation.”

The National Council on Aging called next year’s increase “insufficient”.

“Our country’s support programs do not measure up to today’s realities,” the organization said in a statement after the 2023 COLA was announced.

How Much Do Seniors Depend on Social Security?

There is serious debate about how heavily older Americans depend on their benefits. A 2017 report released by the Social Security Administration said fewer than one in five (19.6%) of those over 65 depended on Social Security for at least 90% of their income.

However, in 2020, the National Institute for Retirement Security put that figure at nearly 40% of seniors.

In October 2022, AARP Chief Executive Officer Jo Ann Jenkins said Social Security “provides almost all of the income” for 25% of retirees. But a Senior Citizen League poll this fall found it to be more like 54%, according to data Johnson provided to CNET.

“It all depends on how you calculate the numbers,” Johnson said. “And of course there are reasons to make that number seem smaller.”

Should Social Security change how it calculates the cost of living adjustment?

A common complaint is about the way the COLA is tabulated. Currently, it is determined by year-over-year changes in the consumer price index for urban wage earners and white-collar workers, or CPI-W.

A bill sponsored by Rep. John Larson, a Connecticut Democrat, would instead peg the COLA to the Consumer Price Index for the Elderly, or CPI-E, which puts more emphasis on the price of health care, housing, and other goods and services that have a greater impact on older Americans.

“The truth is that the COLA has not tracked inflation for years because the current formula does not accurately reflect senior spending,” Larson said in a September statement.

Johnson agrees that the CPI-W is not an entirely accurate assessment.

“It only examines working adults under the age of 62, while Social Security focuses on retirees over the age of 65,” she said. “There are clear differences in how these two groups spend money.”

For example, the CPI-W tends strongly towards gas prices, which have less impact on seniors. Because of this discrepancy, Social Security benefits have lost 40% of their purchasing power since 2000, Johnson said.

But the CPI-E that Larson promotes isn’t perfect either, Johnson said.

“Right now it’s not a fully funded index like the CPI-W,” she said. “It’s more of a research tool used to study spending patterns.”

Johnson said the Senior League is in favor of funding an elderly index as in-depth as the CPI-W, and she says there is broad support in Congress as well.

For more about Social Securityfind out when next year’s increase is cominghow benefits are calculated and how to access your benefits online.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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