If you feel your Social Security check isn’t going as far as it once did to cover your expenses, you are right. It was reported this week that Social Security benefits have lost 30% of their buying power since 2000.
You may recall that the cost-of-living adjustment (COLA) was 1.6% for 2020 which is less than the 2.8% COLA Social Security participants received in 2019. Although the COLA for 2021 will not be announced until October, some are predicting that the Social Security COLA for 2021 will be zero.
Given our country’s current economic situation, zero COLA next year is a real possibility. Following the steepest recession in our nation since the Great Recession between 2007 and 2009, Social Security went two consecutive years without a COLA.
COLA has been calculated since 1975 using the Bureau of Labor Statistics (BLS) Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) based on the rate of inflation from July through September. An important component in the CPI-W inflation calculation is decrease we have seen in gasoline and fuel oil prices due to the large drop in the price of oil.
The NRLN believe that CPI-W isn’t the best financial index to determine whether prices are rising for seniors. We advocate a change to CPI-E (Consumer Price Index for the Elderly) which has a better grasp of seniors’ spending priorities for healthcare, housing, and consumer goods. For example, seniors generally spend more on healthcare due to increased costs for Medicare insurance premiums, doctors, hospitals and prescription drugs.
The NRLN supports H.R. 860 / S. 269, the Social Security 2100 Act which would change the CPI-W to CPI-E. In addition to embracing the CPI-E, the Social Security 2100 Act would:
Ensure the solvency of the program for the next 75 years, the only bill to do so.
Provide an across-the-board benefit increase equivalent to about 2% of the average Social Security benefit.
Increase the minimum benefit to ensure that workers with many years of low earnings do not retire under the poverty line.
When Congress returns to a more normal schedule that is not curtailed by the coronavirus pandemic, the NRLN will resume lobbying for passage for the Social Security 2100 Act.
Bill Kedereit, President
National Retiree Legislative Network