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Social Security COLAs Lagging: Retirees Losing Buying Power
3 Dec, 2025
Summary
- Social Security COLAs often don't match actual inflation faced by seniors.
- The CPI-W measure underestimates inflation for essential senior expenses.
- Retirees are losing purchasing power due to the COLA calculation method.
Many Social Security recipients are finding their increased benefit checks don't quite cover rising costs. The annual cost-of-living adjustment (COLA) aims to offset inflation, but the measure used often underestimates the price hikes seniors face for essentials like groceries, medicine, and housing.
This discrepancy has led to a noticeable erosion of purchasing power for older Americans. Critics point out that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which determines the COLA, is based on the spending habits of working individuals, not retirees. These groups often have different priorities and face distinct cost increases.
An alternative, the Consumer Price Index for the Elderly (CPI-E), weights housing, healthcare, and utilities more heavily, areas where prices have risen more sharply. While not currently used for official COLA calculations, this measure more accurately reflects the financial pressures experienced by seniors, highlighting a persistent gap between their benefits and their actual expenses.
