The Senior Citizens League is predicting that Social Security beneficiaries will receive a 2.6% Cost of Living Adjustment in 2025. Last year’s COLA was 3.2%. The year before, 2022, it was 8.7%. The lower projection for the coming year reflects easing inflation. However, the final COLA number for 2025 will not be released until October of this year.
Since it was established in 1975, the yearly COLA, intended to allow seniors to keep up with inflation, has been pegged to the CPI-W, the Consumer Price Index for Wage Earners and Clerical Workers. This statistic is based on the typical expenses of families living in urban areas whose income is derived from wages or clerical positions. Senior advocates have long argued that CPI-W should not be used to calculate COLA. Instead, they propose using a different metric: the CPI-E, or the Consumer Price Index for Elderly Consumers. The CPI-E is more reflective of the expenses of Americans ages 62 and up. For example, the CPI-E puts less weight on transportation expenses and more weight on health care costs. In most cases using the CPI-E would produce a higher year-end increase for seniors: A study by The Senior Citizens League concludes that if the CPI-E had been used to adjust COLA benefits, COLA would have been higher for seven of the last ten years.
Boosting Benefits And COLAs for Seniors Act
Now, the Boosting Benefits and COLAs for Seniors Act has been introduced in Congress. The bill would amend Title II of the Social Security Act, requiring that the CPI-E be used to use to determine COLA instead of the CPI-W in any given year if it would increase benefits more than the CPI-W. It would also require the Bureau of Labor Statistics to publish the CPI-E every month. The legislation was introduced in Congress by Rep. Ruben Gallego (D-AZ) and in the Senate by Sen. Bob Casey (D-Penn). “My new bill puts more dollars in the pockets of Social Security recipients to pay their bills, get their medications, and pay for housing,” Gallego has said.
Will the bill pass this year? Iffy at best. The AFL-CIO and the Alliance for Retired Americans are among the organizations endorsing it, but it has its opponents, and despite talk of switching to the CPI-E for years, nothing has ever come of it. Plus, we are in an election year. Stay tuned.
