Eighty percent of retirees think Congress should beef up inflation protection by providing cost-of-living adjustment (COLA) that more closely reflects inflation experienced by older adults, according to a new survey by The Senior Citizens League (TSCL).
The 3.2% Social Security COLA announced last month for 2024 is above the 2.6% average over the past two decades. But many senior advocates have proposed using the Consumer Price Index for the Elderly (CPI-E) to determine the annual COLA rather than the current use of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
SEE ALSO: 2024 Federal Retirees COLA Announced
“If that were the law today, the COLA in 2024 would be almost a percentage point higher — 4%, versus the 3.2% just announced by the Social Security Administration,” says Mary Johnson, a Social Security policy analyst for TSCL. Johnson bases this estimate on the rate of increase in the Consumer Price Index for the Elderly (CPI-E).
Since 1975, the Social Security Act provides for how the COLA is calculated. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as determined by the Department of Labor’s Bureau of Labor Statistics.
Senior advocates express concern that the CPI-W index does not survey the costs of retired households over the age of 62. TSCL believes there are other consumer price indexes to choose from that better reflect inflation experienced by older Americans. For example, the CPI-E — which was launched in 1983 — surveys the cost changes of households aged 62 and older.
The Social Security 2100 Act (H.R. 4583), legislation introduced by Congressman John Larson (D-CT), would change how the COLA is determined by requiring the higher of the CPI-W or the CPI-E to be used in calculating the COLA. The proposed bill would also repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). It was last proposed in July 2023.
Johnson provides analysis comparing the two indexes. The analysis indicates that using this approach would provide greater inflation protection and higher benefit growth over time.