social security benefits
Social Security is essential income for many senior citizens. As part of the program, cost-of-living adjustments (COLAs) are made on an annual basis. Each year, the COLA for Social Security benefits is calculated using the Consumer Price Index (CPI). However, some recipients feel that the CPI doesn’t accurately reflect the cost-of-living increases they deal with every year. Some seniors and advocacy groups are pushing for a different index, called the CPI-E (CPI for the Elderly), claiming it better accounts for the cost increases seniors face every year.

Calculating COLAs Using CPI-E

The CPI-E focuses on costs that are typically borne by seniors, both service-based and item-based. These include increased healthcare costs, housing, and other metrics that are more specific to seniors. The CPI, which is now being used to calculate COLAs, includes metrics that don’t affect seniors as much as the younger portion of the population, such as education, transportation, and food (seniors are often only buying for themselves, and possibly a spouse; younger people are more likely to have families and spend a larger portion of income on groceries).

A study carried out by a respected senior advocacy group has indicated that using the CPI-E to calculate COLAs for Social Security benefits would have resulted in larger COLAs in most years over the past three decades. As a result, some advocates for seniors are concluding that Social Security beneficiaries have basically been losing ground because their COLAs aren’t keeping pace with their actual cost-of-living increases.

Seniors Face Higher Costs, Lower COLAs

As compared to the CPI, the CPI-E has seen a greater increase than other measures of the growth of inflation. The COLAs made on the CPI have been lower than would have resulted from calculations using the CPI-E, and advocates like The Senior Citizens League are making the argument that it’s unfair to beneficiaries. The CPI-E would have given retirees a COLA of 2.1% for 2017, rather than the 0.3% calculated under the CPI. While this may not seem like a huge increase, it makes a big difference over time. For example, a retiree with typical benefits (around $1,355 a month) would have seen nearly $30,000 more in benefits over their lifetime if the CPI-E had been used to calculate Social Security COLAs.

Politics Trump Needs

The argument for using the CPI-E to calculate COLAs is a persuasive one, as it makes sense to account for the higher costs facing seniors. Unfortunately, with the current political climate, tying Social Security COLAs to the CPI-E may be an impossible dream. Retirees could even be facing cuts to their current benefit amounts, never mind actually increasing them. Unfortunately, making the move to the CPI-E would entail greater program costs associated with increased Social Security benefits, making it difficult for lawmakers to agree to. It would be much fairer to senior citizens, but fair isn’t always the bottom line when it comes to making changes to government programs.



Social Security Disability Attorney Kenneth G. Marks Law Firm
24422 Avenida de la Carlota, Suite 310
Laguna Hills, CA 92653
Phone: 949.748.6470, Fax: 949.748.6474