New Bill Changes How Social Security COLAs Are Calculated

However, when looking at the history of Social Security COLAs, using CPI-E would not always have resulted in a larger benefit increase. In 2021, for example, the COLA with CPI-E would have been 4.8% instead of 5.9%, retirement researcher Alicia Munnell pointed out in a 2022 interview.

Another Social Security expert, Marcia Mantell, has written that the CPI-E does not reflect the millions of Social Security beneficiaries who are younger than 62, including people with disabilities, surviving spouses and their children.

Social Security Advocates Weigh In

The National Committee to Preserve Social Security and Medicare has endorsed Casey's bill.

"While Social Security COLA's have been decent during the past two years, there have been times in the past decade when the COLA was as little as 1.3% and ZERO percent," Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, told ThinkAdvisor Thursday in an email. "Seniors need healthy COLAs in order to keep up with the impact of inflation on their basic living costs, especially since the average Social Security benefit is already quite modest."

Nancy Altman, president of Social Security Works, which also endorsed the bill, said in another email Thursday that Social Security's annual COLA "is among its most important features. But benefits are slowly eroding because the COLA is based on a formula, the CPI-W, that under-measures health care costs and other expenses Social Security beneficiaries face."

The Boosting Benefits and COLAs for Seniors Act "would fix this by incorporating a more accurate formula, the CPI-E, which is based on the specific expenses of seniors rather than workers," Altman relayed. "We commend Sen. Casey and his colleagues for this legislation and urge Congress to pass it swiftly, either on its own or as part of a comprehensive Social Security expansion bill."

Altman added that while Social Security legislation is unlikely to pass in 2024, President Joe Biden and the Democrats in Congress "are running for re-election on a platform of expanding Social Security, paid for by the ultra-wealthy. If they win, then we think real progress can and will be made in 2025."