Social Security COLA

Is the Social Security COLA adequate, does it keep up with inflation? Yea, it does, but not necessarily inflation as it applies to most retirees, but it’s not that far off.

Many experts say the measure should be the CPI-E which is intended to better reflect senior spending. But even that is not a solution, because the CPI-E can actually be lower than the CPI-W which is used now.

Social Security and its COLA should be applying to only a minor portion of total retirement income. The reality is:

  • 21% of the married couples on Social Security rely on it for over 90% of their income. At least half of married couples using the program rely on it for over half of their income.
  • 45% of single retirees rely on social security for over 90% of their income. At least 70% of them rely on the program for over half of their income.

That should not be!

By that I mean no one should enter retirement with such reliance on Social Security. A lifetime of work is ample time for nearly everyone to accumulate some savings to significantly supplement Social Security or better still for SS to supplement primary retirement income.


  1. COLAs should virtually be a non-issue. Many people paid into it who simply don’t need it. Mine goes automatically straight to Dollar Cost Averaging in index funds. One or two percent more or less is negligible.*

    For those who have no savings or other income, the social welfare system should take up the slack, full stop. Whether working or retired, society (that’s us) should provide a liveable income (with dignity, we can afford it).

    *Not suggesting means testing, just leave it as it is and work around it.


    1. Actually nobody has paid into COLAs, but i agree in your idea. In fact, I suggest that anyone who starts off collecting maximum SS FRA benefit not be eligible for a COLA. At that income level they should have other income.


    2. “For those who have no savings or other income, the social welfare system should take up the slack, full stop.”

      NEWS FLASH!!!

      Don’t fool yourself into thinking that the social welfare system will take up the slack. It is nothing more than a jobs program for the people that work there.

      My friend Alise is 63 and receiving $900 per month Social Security disability, this is after 42 years as a waitress / store clerk. She never made more than 18,000 per year while working 3 jobs that year. In 2018 she made just $10,215. I know this because i did her taxes for the last 20 years. Her SNAP benefits are $26 per month. So much for taking up the slack.

      What is more upsetting is that after 42 years of work the low income worker gets the shaft once again. $900 is below the poverty level and the welfare aid is laughable.

      Since no one has paid for the Social Security benefits in full and get everything that was paid in FICA taxes back in 6 to 10 years, it is past time for an adjustment for the lower paid workers at least up to the poverty rate $14,580 per year.

      Maybe it is time to means test Social Security. Does Joe and Jill Biden really need the $54,000 in Social Security benefits that they receive each year to make it.

      This example is why economist Melton Friedman called Social Security the biggest wealth transfer to the rich ever devised. Think about it the lower paid worker gets the small check while working his whole life and then continues to get the smaller Social Security in retirement, when he needs the help the most.


      1. How is it the shaft? Her SS benefit is equal to her 2018 income. Living in poverty, yes and no fun, but should retirement provide income higher then when working? SS formula provides a much higher benefit for the lower income. Is she not eligible for benefits in addition to SNAP? SS was not designed as a welfare program. Let’s make sure SS remains solvent first then talk about raising the lower income benefit.


      2. RD – You just do not get it. A person works 42 years at low wage jobs, living in poverty all her life and then in retirement disabled, so she could not go back to work even if she wanted, still living in poverty. I thought the whole idea of Social Security was to keep retirees out of poverty. Also, 2018 was not a full year of employment, that was when she applied for SS disability, four years later, all savings gone, car and personal items sold just to make it until disability was approved. Now 2023 the buying power of her 2018 income has lost $2,287.

        You never respond to my comment of what Melton Freidman said about SS.
        Your and the Bidens SS checks proves it is true. The higher paid worker getting the bigger SS check is a disgrace, . Since we all know, no one has paid for the total SS benefits that they could receive after getting all their FICA taxes back. Why is it right for the higher paid worker to get a windfall, that the lower paid worker does not. SS needs to be changed that is for sure. I am for means testing and believe for the high earners with other income once they get their FICA taxes back their SS checks stops. Or even a better idea, everyone gets the same SS check amount.


      3. In the absence of SS where would your friend be? SS is doing exactly what was intended, providing a basic level of security. It was never designed to raise a standard of living. The benefit is highly in favor of low income workers. For example, the benefit equals a) 90 percent of the first $1,115 of his/her average indexed monthly earnings, plus
        (b) 32 percent of his/her average indexed monthly earnings over $1,115 and through $6,721, plus
        (c) 15 percent of his/her average indexed monthly earnings over $6,721.

        I don’t see that as wealth transfer or favoring the higher income. The higher paid worker paid higher taxes and the higher benefit reflects only that. There is no windfall and in addition the higher paid worker pays income taxes on their benefit plus much higher Medicare premiums based on total income.


  2. I have come around to believe maybe the bottom 40% can’t really get out of their own way and accumulate anything of significance for retirement. Given the substance abuse level, divorce rates, born out of wedlock children, lack of job stability, and ignorance about personal finance, I’m surprised that I think only 40% can’t do it.
    Just because someone should be doing something like saving doesn’t mean they will do it.


    1. As I have said several times writing on HumbleDollar, let me see a persons grocery shopping cart and I will find enough savings to start a small nest egg for the future.


      1. To be fair, look in my dentist’s garage, also. He has, at least, two Corvettes* and a Ferrari. He probably has a good retirement nest egg, also, but we can’t be sure of that can we? A safe bet is that there are thousands of dentists every year who die in debt.

        *One specifically for inclement weather.


    2. The bottom 40 percent are not all the same.

      The Pareto principle states that for many outcomes, roughly 80% of consequences come from 20% of causes (the “vital few”).*

      The same principle describes the top 40 percent as well. There are some real boneheads at every income level. As in the 2017 study that 73 percent of Americans die in debt.

      *Also known as the “principle of factor sparsity”.


  3. Heart breaking, or “normal”?

    “His father had been a police officer, a restaurant manager, a real estate agent, a private investigator, a Mason and a Little League umpire. He had wanted a large funeral…”

    dot, dot, dot

    “Here’s Dad,” the funeral employee said, as she walked back into the room holding a small cloth bag.

    “This is it?’” Dave asked.

    “Our process is very efficient,” she said.

    Like a record 23 percent of Americans who’ve died in the past five years, the ultimate financial worth of his father’s life was nothing — a number somewhere below zero.

    “Our process is very efficient,”


  4. “A lifetime of work is ample time for nearly everyone to accumulate some savings to significantly supplement Social Security or better still for SS to supplement primary retirement income.”

    I doubt that.

    “…73 percent of consumers had outstanding debt when they were reported as dead, according to December 2016 data provided to by credit bureau Experian. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875.”

    Unclear if perhaps the home equity was enough to pay off all or most of the debt.

    Every article I’ve read refers back to that same study, so it could be much better, or much worse now.


    1. Because they had debt doesn’t mean they should have had debt or could not have avoided it. Look around anywhere and see how people spend their money and on what. I maintain except for 15% or maybe 20% of the population everyone can save and invest relative to their income. Surveys say 40% of Americans can’t come up with $400 for an emergency. Do you believe that?


      1. Last month, our granddaughter came up with $200 for a new car battery. She called Grandpa, but that’s another story.

        I believe that if most people followed your example, millions of others would be out of a job.


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