How Social Security calculates raises and why it should change - AMAC & The Motley Fool

Maurie Backman of The Motley Fool notes that seniors are in line for big boost to monthly Social Security benefits in 2022.  But the way inflation is calculated to compute the cost of living adjustment (COLA) continues to be a source of some controversy.  Currently, Social Security COLAs are calculated based on third-quarter figures from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).  When CPI-W indicates that the overall cost of a basket of common goods and services has risen, benefits are raised.  But the “urban wage earners and clerical workers” aspect is problematic, as retirees are not, as a rule, urban wage earners or clerical workers.  Thus, the costs that most heavily influence the CPI-W don’t accurately reflect the things seniors tend to spend the most money on.  Backman discusses a different calculation that has been debated for years but not been enacted by members of Congress called the Consumer Price Index for the Elderly (CPI-E).  She dubs the CPI-E “a senior-centric index” because it would calculate benefits using items seniors tend to buy and then adjust them accordingly.  Read the full article in USA Today here.

The Association of Mature American Citizens (AMAC) believes Social Security must be preserved and modernized.  This can be achieved with no tax increases by changing cost of living adjustments, the retirement age, and delayed credits.  AMAC advocates for a bipartisan compromise, “The Social Security Guarantee Act,” taking selected portions of bills introduced by former Rep. Johnson (R-TX) and current Rep. Larson (D-CT) and merging them with the Association’s own research.  One component is Social Security PLUS, a voluntary plan to allow all earners to have more income at retirement.  This component is intended to appeal especially to younger workers.  AMAC is resolute in its mission that Social Security be preserved and modernized and has gotten the attention of lawmakers in DC, meeting with a great many congressional offices and their staffs over the past several years.  Read AMAC’s plan here.


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