Social Security Update: New Bill Could Benefit Seniors Immensely by Improving Cost-of-Living Formula

Gray-haired man standing and counting money stock photo
Zinkevych / iStock.com

A new bill proposed by Rep. John B. Larson (D-CT) would bring sweeping changes to Social Security benefits, including hiking the annual cost-of-living adjustment to better reflect costs incurred by seniors.

LATEST POLL: How Do You Plan To Travel Over the Thanksgiving Holiday?
Senior Stimulus: Advocacy Group Proposes One-Time, $1,400 Payment for Social Security Recipients

The bill, called “Social Security 2100: A Sacred Trust,” is slated to be introduced this week, according to a report from 401K Specialist. If it passes, it would provide an increase for all beneficiaries that is equivalent to about 2% of the average benefit, Larson said on his website. It would also tweak the annual COLA by adopting a CPI-E (Consumer Price Index-Elderly) formula designed to take into account health care expenses, which seniors spend a greater portion of their income on than other age groups.

“Improved inflation protection will especially help older retirees and widows who are more likely to rely on Social Security benefits as they age,” Larson wrote in a statement.

A higher cost-of-living adjustment is especially important now, with inflation running so high. As GOBankingRates previously reported, the COLA for 2021 was only 1.3%, which means next year’s adjustment will rise by more than 4%. Some senior groups wanted an even higher COLA for 2022 of 6% to 6.1%, arguing that it would be needed to fully cover the needs of seniors.

Retire Comfortably

Senior Savings: How Exploring Medicare Options Cuts Costs During Open Enrollment

Other highlights of Larson’s bill include the following:

  • Protects low-income workers by setting a new minimum benefit of 25% above the poverty line, which would be tied to wage levels to ensure that the minimum benefit does not fall behind.
  • Provides higher benefits for widows and widowers in two income households.
  • Repeals the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) that “currently penalize many public servants.”
  • Ends the 5-month waiting period to receive disability benefits.
  • Provides caregiver credits to ensure that caregivers aren’t penalized in retirement for taking time out of the workforce to care for children or other dependents.
  • Extends benefits for students through age 22.
  • Increases access to benefits for children who live with their grandparents or other relatives.

Stimulus Update: Petition for $1,400 for Seniors, Golden State Check Delays & October’s Child Tax Credit
Social Security FYI: Will Stimulus Payments and Child Tax Credit Affect Your Benefits?

The bill would also require the wealthy to pay the same Social Security payroll tax rate as everyone else. Right now, Social Security taxes are not collected on annual wages over $142,800. Larson’s legislation would apply the payroll tax to wages above $400,000.

Retire Comfortably

More From GOBankingRates

Last updated: October 22, 2021

About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.