Proposed Change in Social Security Could Mean More Money for Retirees
A proposed bill could change how the Social Security COLA is calculated, resulting in higher benefits for retirees.
A new bill could result in an important change in Social Security cost of living adjustments (COLAs) that could benefit retirees. The Boosting Benefits and COLAs for Seniors Act, proposed by Rep. Ruben Gallego (D-Ariz.) and Sen. Bob Casey (D-Pa.), aims to “protect and expand benefits for older adults who rely on them” by making significant changes to the COLA calculation.
The bill claims that many older adults struggle to afford necessities, like food, medication and clothing, because current Social Security benefits have not kept up with rising costs.
“Rising costs mean Arizona seniors on Social Security see the real value of their benefits decrease,” Gallego said in a statement. "My new bill puts more dollars in the pockets of Social Security recipients to pay their bills, get their medications and pay for housing.”
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Change in Social Security COLAs
The COLA is currently based on the Consumer Price Index for Urban Wage Earners (CPI-W), which reflects everyday spending an individual would face, including expenses for food, housing, transportation, consumer goods, etc.
Under the new bill, however, the COLA would be based on the Consumer Price Index for Americans aged 62 or older (CPI-E), as this price index reflects the costs incurred by older adults more accurately. Medical expenses, an increasing burden on older adults, are weighted more heavily in the CPI-E than in the CPI-W.
Keeping up with rising healthcare costs
According to data from the U.S. Department of Health and Human Services, out-of-pocket healthcare expenditures for individuals age 65 and older rose 41% from 2009 to 2019, going from $4,846 to $6,833. Older individuals paid significantly more than the total population, which spent an average of $5,193 in out-of-pocket costs in 2019. Overall, older Americans spent 13.6% of their total expenditures on health, compared to just 8.2% among all consumers.
“The current COLA formula doesn’t accurately account for the inflation seniors face, especially in health care,” Roman Ulman, president of AFSCME Arizona Retirees Chapter 97, said in a statement. “It’s important that the COLA reflects how inflation impacts seniors so that we can pay our bills and our monthly Social Security checks stay strong.”
Along with directing the Social Security Administration (SSA) to adjust benefits based on CPI-E rather than CPI-W (if CPI-E would result in a larger increase in benefits), the Boosting Benefits and COLAs for Seniors Act would also direct the Bureau of Labor Statistics to calculate and publish the CPI-E every month.
According to Newsweek, the proposed legislation, if passed, "would apply to determinations made with respect to cost-of-living computation quarters ending on or after September 30, 2024." However, some experts, including Richard Johnson, senior fellow and director of the program on retirement policy at the Urban Institute, don't see the bill going far in Congress.
“This has been talked about for at least a decade," Johnson tells MarketWatch. "If it were part of a broader package of Social Security reforms, maybe." He claims these changes would cost more and add budgetary stress to the Social Security system.
Related Content
-
Stocks Struggle for Gains to Start 2026: Stock Market TodayIt's not quite the end of the world as we know it, but Warren Buffett is no longer the CEO of Berkshire Hathaway.
-
Tip: Ways to Track Your Credit Card RewardsHere are the best strategies and apps to help you stay current with your credit card rewards.
-
How New Investors Can Pick Their Perfect Portfolio, According to a ProSee what Cullen Roche has to say about finding your perfect portfolio as a new investor and his two-word answer on where he thinks the stock market is headed in 2026.
-
Tip: Ways to Track Your Credit Card Rewards
Here are the best strategies and apps to help you stay current with your credit card rewards.
-
High-Net-Worth Retirees: Don't Overlook These Benefits of Social SecurityWealthy retirees often overlook Social Security. But timed properly, it can drive tax efficiency, keep Medicare costs in check and strengthen your legacy.
-
Do You Have an Insurance Coverage Gap for Your Valuables? You May Be Surprised to Learn You DoStandard homeowners insurance usually has strict limits on high-value items, so you should formally "schedule" these valuable possessions with your insurer.
-
What to Do If You Plan to Make Catch-Up Contributions in 2026Under new rules, you may lose an up-front deduction but gain tax-free income once you retire.
-
How to Max Out Your 401(k) in 2026 (New Limits are Higher)In 2026, the maximum contribution limits for 401(k) plans have increased, giving you an excellent shot at maximizing your retirement savings.
-
8 Practical Ways to Declutter Your Life in 2026: A Retirement 'Non-Resolution' ChecklistHere's how to stop wasting your energy on things that don't enhance your new chapter and focus on the things that do.
-
To Retire Rich, Stop Chasing Huge Returns and Do This Instead, Courtesy of a Financial PlannerSaving a large percentage of your income, minimizing taxes and keeping spending in check can offer a more realistic path to retiring rich.
-
New Year, New Retirement Rules: Here's How You Can Keep Up as the Landscape ChangesFor a successful modern retirement, prepare for a longer life, manage high health care costs and prioritize your social life and purpose.
