Social Security Benefits Could Be Dramatically Changed Under New Bill

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A newly proposed bill introduced by Arizona Representative Ruben Gallego, a Democrat, could change how the yearly cost-of-living adjustment to Social Security benefits is calculated, potentially boosting checks for retirees and other recipients.

The proposed legislation, called the Boosting Benefits and COLAs Act, is an attempt to amend Title II of the Social Security Act to require the Commissioner of Social Security to use the Consumer Price Index for Elderly Consumers (CPI-E) to calculate the yearly cost-of-living adjustment, better known as COLA, instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Should the CPI-W be higher than the CPI-E, the first should be used instead of the latter.

The annual COLA is currently based on the percentage increase in the CPI-W between the third quarter of the previous year and the third quarter of the current year. If there's no increase, there's no COLA. The idea is to adjust Social Security benefits so that they can keep pace with inflation: in 2024, the COLA was 3.2 percent, a much smaller boost than the previous year, when the adjustment had been 8.7 percent.

But Gallego argues that this formula doesn't consider the specific costs that retirees have to face, which are different from the rest of the American population. For example, medical expenses weigh more heavily on elders than younger people—a number which is reflected in the CPI-E, but not necessarily in the CPI-W.

https://www.msn.com/en-us/money/retirement/social-security-benefits-could-be-dramatically-changed-under-new-bill/ar-AA1nAQz7