The effects of inflation spares no one regardless of income bracket. However, for those living on a fixed income such as Social Security, the effects of inflation and rising costs can become especially dire. In order to aid this issue and help maintain the buying power of the monthly benefit, the Social Security Administration implements an annual Cost of Living Adjustment, or COLA.
Inflation rates are measured year over year and if there is an increase, this figure becomes the COLA for the upcoming year. The issue being raised by an advocacy group, however, is that the COLA does not measure up to the actual rise in costs held by the elderly and as a result, many seniors have begun to feel frustrated with their benefit amounts.
Drawing from these concerns, The Senior Citizen’s League, a nonpartisan advocacy group, is now proposing a “one time catch up payment” for Social Security recipients to offset some of the rising costs. Here is what you need to know.
Is the Social Security COLA inaccurate?
The annual COLA is determined using the third quarter data of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the current year as measured against the third quarter CPI-W of the previous year. The issue with this, many seem to be finding, is the lack of accuracy with regards to the actual costs of senior citizens. This is because the CPI-W is a measure of inflation in relation to the lifestyles of those who are currently in the workforce and live vastly differing lifestyles than that of the elderly.
A recent survey conducted on close to 2,000 seniors eligible for Social Security benefits by TSCL revealed that, “the most popular option, supported by 68 percent of seniors, was calculating the COLA with an inflation index that better represents seniors’ economic experiences. The government currently calculates the COLA with the Consumer Price Index for Urban Wage Earners, but TSCL advocates switching to the Consumer Price Index for the Elderly.”
A few months prior to this survey, the Bureau of Labor Statistics also shared that “it had used a less accurate method for estimating prices more than usual, due to a shortage of workers, and it has stopped collecting consumer inflation data in three cities,” further worsening the overall accuracy of the CPI-W.
At the time, TSCL also wrote the following: “If the government fails to act and the CPI’s data quality begins to erode, it increases the likelihood of the government providing a COLA that doesn’t match inflation.”
Subsequently, TSCL is now proposing that seniors receive a once-off $1,400 “catch up payment” to better supplement their benefit income in the face of rising costs.
How will this catch up payment work?
The 2026 COLA will only be announced later in the year in October once the third quarter CPI-W data becomes available, however TSCL had projected a 2.6% bump for seniors based on the currently available data.
“Many older Americans saw their Social Security buying power eroded during the recent inflation spike, and rising Medicare Part B premiums often wiped out their entire COLA increase,” TSCL executive director Shannon Benton shared with Nexstar. “A catch-up payment would help restore that lost value and provide urgently needed relief for retirees living on fixed incomes.”
Whilst much detail regarding the “catch up payment” was not mentioned in last month’s press release, in the email shared with Nexstar, Benton envisioned a payment of $1,400 for qualifying seniors. In the email, the advocacy group suggested that eligible beneficiaries would be paid “in the same way that that 2009’s $250 Economic Recovery Payments were doled out to Social Security and SSI recipients amid the Great Recession.”
TSCL is an advocacy group for seniors specifically, however Benton did also note that the group would be “thrilled if everyone on Social Security could receive a special boost.”
Whilst the “catch up payments” will be beneficial to seniors in a short term basis, TSCL also believes that there remains a fundamental issue with regards to how the COLA for seniors is determined.
“If four in five seniors think inflation was higher than the government reported in 2024, maybe we should stop questioning their experiences and start questioning why the COLA is failing to measure them,” Benton noted at the time.