David Payne at Kiplinger.com reports that The Kiplinger Letter projects a Social Security cost-of-living adjustment (COLA) of 3% for 2022.
While a larger COLA compared to the meager ones of recent years would be welcome, there are still some major issues with the situation.
First, The Kiplinger Letter notes that “COLAs are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers.” This formula does not accurately take into account the true expenses of senior citizens. As it says in the name, the formula is calculated based on “wage earners and clerical workers.” This means its price index is weighted towards a generally younger population compared to senior citizens who are older by definition.
People in their 20s, 30s, and 40s have different spending habits than those 60 and older. Social Security COLAs for retirees should be based on their needs and spending habits – not the general population’s.
Taking these spending differences into account, it’s clear seniors may actually deserve a higher Social Security increase than 3%. Medical expenses, the challenges of life during the COVID-19 pandemic, and rising gas prices all hit seniors the hardest. The Social Security COLA formula should better reflect the true nature of rising costs for seniors.
This brings us to our second point: the 3% COLA NORA advocates for is the absolute minimum increase that is acceptable. Congress must GUARANTEE retirees a 3% COLA every single year. Often it should be much higher.
A Legal Guarantee for Social Security COLAs
Whether the COLA for 2022 actually reaches 3% or not, Congress must move to pass The Guaranteed 3% COLA for Seniors Act. Retirees deserve to have the peace-of-mind that their annual Social Security COLA will be fair and reflect their expenses. Any amount lower than 3% will not be adequate.
To set things right for the years of low COLAs, The Guaranteed 3% COLA for Seniors Act must be made retroactive to 2010. This would provide most retirees a reimbursement of about $10,970. This would not be a handout or welfare. This is money retirees deserve. Retirees earned this money.
How have the years of low COLAs impacted you? Leave us a comment below or message us on our contact form, Twitter, or Facebook.
