As Johnson pointed out, the COLA is intended to protect the buying power of Social Security benefits from eroding when prices go up. But when the annual inflation adjustment does not rise in sync with growing costs, the buying power of benefits erodes. That chips away at the standard of living of all benefit recipients, she said. “And that causes people who don’t have savings to go into debt and perhaps drop into poverty.”
“There is something screwed up when the retirees’ major costs are not getting offset by the COLAs," Johnson said. "That does not make sense.”
She added that the COLA is figured using an index that measures spending of people who are younger than 62 and households that do not include any retired individuals.
Johnson said when you have years of COLA that do not adequately offset Medicare costs, it is time to start a dialog to change that. She said the Senior Citizens League is working to ensure that members of Congress are aware of the possibility of an extremely low COLA in 2021, and that corrective action will be needed, especially to address the potential of surging Medicare premiums. Her group proposes an emergency COLA of at least 2.5%.
Additionally, she said, the 1.2 million-strong group supports legislation that would strengthen the COLA by basing its calculation on the Consumer Price Index for the Elderly (CPI-E) that better reflects the spending patterns of retirees; provides a modest boost in monthly benefits to make up for years when no COLA or only a negligible COLA was payable; and guarantees a minimum of 3% COLA.