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Two Ways Congress Might Change COLAs
Trevore Jennewine gives a primer here on cost of living adjustments (COLAs); he notes seniors rely on this benefit increase each January to keep pace with rising prices on goods and services. But is the current formula working? Adjustments are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), but some experts see that as a problem. CPI-W measures price changes from the perspective of workers, but active workers tend to spend money differently than retired workers and other Social Security recipients. One idea is to use the Consumer Price Index for the Elderly (CPI-E), which measures price changes from the perspective of individuals 62 or older. This would increase COLAs by an average of 0.2 percentage points per year. Read more here.