COLA: A Look at the Impact of Using CPI-E
As we near the time of the year when Social Security publishes its cost-of-living adjustment (COLA) for next year, we hear more and more about how this adjustment is calculated and what it means for seniors’ ability to keep pace with inflation. The Motley Fool’s Sean Williams, in a post on www.msn.com, discusses The Senior Citizens League’s report on Social Security funds paid to seniors absorbing a 34% drop in purchasing power since the turn of the century, and the shortcomings of the current process attributed to its use of CPI-W as the key parameter. He then addresses an alternate proposal–the switch to CPI-E–that has been suggested as a way to help seniors maintain their living standard, and summarizes the drawbacks associated with this approach. Read Williams’ post here…
Note that the Association of Mature American Citizens (AMAC), in addressing the long-term Social Security solvency dilemma, has also addressed the COLA issue, but is advocating an annual process based on household income levels that would ensure higher adjustments for low earners. This recommendation is part of AMAC’s Combined Social Security Guarantee and Social Security Plus Initiative, which can be accessed here…
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