But there could be some much-needed help coming if Rep. Peter DeFazio (D-OR) and Sen. Bernie Sanders (I-VT) have their way. According to the details of their recently introduced Social Security Expansion Act, Social Security recipients would be in line to receive an extra $200 in their monthly checks—an annual increase of $2,400. Much of the money would come from an increase in the Social Security payroll tax on higher-income workers.
“Many, many seniors rely on Social Security for the majority, if not all, of their income,” Martha Shedden, president of the National Association of Registered Social Security Analysts, told CBS News.
“$200 a month can make a significant difference for many people,” she added.
The lawmakers’ plan comes after the Social Security Administration (SSA) earlier this month confirmed that Americans will stop receiving their full Social Security benefits in about thirteen years if Congress refuses to take action to shore up the program.
“This legislation would ensure that the Social Security Trust Fund remains solvent for another seventy-five years, increase monthly benefits for most recipients by $200, and alter the cost-of-living-adjustment (COLA) formula to meet the everyday needs of our nation’s seniors,” DeFazio said in a statement.
Shedden noted that the bill, which will likely face hurdles in Congress, will help push lawmakers to take action before the monthly benefits are slashed by roughly 20 percent starting in 2035.
“I'm confident changes will be made,” she said. “I don't know if this is the bill that will pass, but there is more and more movement on it.”
Whether or not the legislation becomes law, what seniors can surely count on is that they are on track to receive the biggest COLA raise in four decades. The Senior Citizens League has estimated that, based on May inflation data, the adjustment could be as high as 8.6 percent.
“Inflation means lower savings and for people who don’t have enough savings, it can mean higher debt,” said Mary Johnson, a Social Security policy analyst for the Senior Citizens League, per Fox Business.
“And the interest with rising rates, especially on consumer credit card debt, can be very costly for people living on fixed income and hard to manage when they’re in retirement,” she continued.
The COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W—a more general inflation measure than the headline Consumer Price Index for all Urban Consumers, or CPI-U. The CPI-W weighs clothing, food, and transportation costs more heavily than the CPI-U. The SSA will set the 2023 COLA in October based on the previous three months of inflation data—meaning that the actual COLA increase could be different from the Senior Citizens League’s forecast.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.