Social Security flat-rate COLA: Why 80% of beneficiaries could lose purchasing power
Social Security's flat-rate COLA could boost low-income beneficiaries but reduce purchasing power for 80% of recipients, especially middle-income retirees.
A proposal from 1987 to provide Social Security beneficiaries with a fixed dollar increase in their benefits each year, instead of a percentage increase, is making a comeback. Known as the "flat-rate COLA," this proposal would give every beneficiary the same dollar increase, regardless of their current benefit level. The concern is that this system could result in the purchasing power of 80% of beneficiaries declining over time.
AARP estimates that if the flat-rate COLA had been in place in 2026, the average beneficiary would have received about $34.20 less per month than they would have under the current system, which would translate to a loss of about $285 over the entire year. AARP warns that this issue could become more pronounced as beneficiaries age, as the smaller dollar increase would fail to keep pace with rising costs of living.
While supporters argue that the flat-rate COLA would be more helpful for lower-income beneficiaries, critics like AARP warn that it could lead to weaker inflation protection for the majority of Social Security recipients.
Written by urgent.news from Hindustan Times - World News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
