Social Security COLAs have a serious flaw. Will Kamala Harris address them if elected president?

Social Security is a program that millions of American retirees rely on today. But the program has its share of problems.

A major problem with Social Security is that the program faces a revenue shortfall in the coming years as baby boomers leave the workforce en masse. A large increase in the number of retirees will translate into more claims for benefits and less payroll tax revenue for Social Security. Unless lawmakers find a way to pump more money into the program, Social Security may have to cut benefits in about a decade.

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Another problem with Social Security is that the program’s annual cost-of-living adjustments (COLAs) have long failed to keep pace with inflation, despite the fact that they are supposed to do just that. As a result, seniors who rely on these monthly benefits lose purchasing power year after year. And without legislative intervention, many risk a number of serious consequences, such as not being able to afford housing, food and medicine.

During the Democratic National Convention in August, Kamala Harris accepted her party’s nomination for president and gave a speech that outlined many of her goals. During that speech, she pledged to protect Social Security, but didn’t go into much detail about what that might entail.

So the question is: Will Harris work to change the way Social Security COLAs are calculated? There is great reason to believe he will.

Harris has a history of fighting to improve Social Security

In 2019, Kamala Harris was one of the co-sponsors of the Social Security Expansion Act. This bill proposed various changes to improve the financial lives of seniors on Social Security. And one of those changes was overhauling the way Social Security COLAs are calculated.

Currently, the Social Security COLA is based on third-quarter changes in the Consumer Price Index for Urban Wage and Service Workers (CPI-W). The problem, however, is that the CPI-W doesn’t do a great job of capturing the costs of Social Security recipients specifically.

Seniors on Social Security, for example, will spend more of their paychecks on health expenses, while urban earners are likely to spend more on fuel and transportation. In addition, workers are more likely to congregate in urban areas to maintain access to jobs. Retirees, by their nature, do not work and therefore do not have to worry about approaching employment opportunities.

It’s these disconnects and others that have plagued Social Security recipients over the years. The nonpartisan Senior Citizens League estimates that as of 2023, seniors on Social Security have lost 36% of their purchasing power since 2000. Changing the way Social Security COLAs are calculated could be key to increasing seniors’ purchasing power .

A positive change could be coming

If elected president, there’s a good chance Harris will support a shift to using the Consumer Price Index for seniors in determining the Social Security COLA. An index that consists of senior-specific spending could lead to more generous annual increases that make it easier for Social Security recipients to cope.

For now, however, seniors on Social Security should recognize that they risk losing purchasing power from year to year because of the current COLA calculation system. Cutting back on expenses or turning to the gig economy for extra cash are two options that current retirees can use if they’re struggling to cover their bills with Social Security alone and no savings to fall back on.