Social Security’s 2025 COLA, and a “World of Distress” - The Motley Fool; TSCL
The 2.5% cost-of-living adjustment is a welcomed boost for Social Security beneficiaries; that’s a given. And the fact that this adjustment reflects a lessening of the inflationary pressures that have weighed on the economy for the past four years is indeed a good sign. Right?
Well, according to a post today by The Motley Fool’s Maurie Backman, recent history tells a different story about seniors and their ability to keep their heads above water financially. Her article cites reports from the nonpartisan Senior Citizens League (TSCL) indicating that COLAs since 2010 have been inadequate for seniors to keep pace with the relentless cost of living. As a result, she notes, “Social Security recipients may unfortunately be in for a world of financial distress in 2025” despite the increase.
Earlier this year, TSCL reported that the buying power of the benefits received by seniors has declined by 20% since 2010. Ms. Backman’s article explores this issue, citing a “flaw” in the COLA calculation process that results in the annual adjustment failing to adequately measure spending categories more common to seniors. She’s referring, of course, to the Consumer Price Index for Americans 62 years of age and older, or R-CPI-E, more commonly known in the media as CPI-E. TSCL advocates adoption of this measurement in place of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) currently used. At this point, it’s anybody’s guess whether a COLA methodology change will happen soon since what is more critically needed is an extensive restructuring of Social Security to address the well-known insolvency issue and the rapidly diminishing timeframe for its resolution.