Social Security benefits receive an annual cost-of-living adjustment (COLA) intended to keep benefits aligned with inflation. COLAs are calculated using third-quarter changes in the CPI-W, which reflects spending patterns of urban wage earners and clerical workers rather than seniors. Seniors typically devote a larger share of benefits to healthcare-related costs such as deductibles, coinsurance, and premiums, while healthcare inflation has risen faster than broad inflation. An analysis by the Senior Citizens League estimates Social Security benefits lost 13.7% of buying power between 2016 and 2026. A proposed fix is switching COLA calculations to a senior-specific index, CPI-E, but lawmakers face concerns about CPI-E’s accuracy because it was developed by the Bureau of Labor Statistics as a research index rather than an official inflation measure.
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