Social Security Update: New Bill Would Change COLA for Seniors

A bill reintroduced in Congress could raise Social Security benefits for seniors by slightly larger amounts, but its chances of becoming law are slim. The Social Security 2100 Act proposes temporarily changing the way cost-of-living adjustments (COLAs) are calculated from 2027 to 2036. Rather than using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks spending by working-age Americans, the bill would add a second measure, the Consumer Price Index for the Elderly (CPI-E), that reflects spending patterns of Americans aged 62 and older.

Social Security would then use whichever index produced the larger COLA each year. While this approach is seen as an improvement, it faces limited Republican support and has only been referred to committee. Michael Ryan, a finance expert, notes it may be more useful as a negotiating tool than a standalone solution. The CPI-E has historically risen about 0.2 percentage points faster than the CPI-W each year because older Americans tend to spend a larger share of their budgets on health care.

This could lead to modest annual increases in benefits, though compounding over decades could result in about a 2% higher benefit amount. Still, financial experts caution that while the change would help retirees keep pace with rising costs, it does not address the long-term solvency of the Social Security program, which faces significant funding challenges.