4.1 Is the COLA still being overstated?

This is a matter upon which experts disagree. The Boskin Commission reported that the CPI overstates true cost of living by about 1.1%, whereas other experts believe that such over statement is only about 0.2%.

4.2 CPI does not measure items that seniors need: housing, food, utilities, and medicine. How can we legitimately reduce COLA below even the CPI?

The CPI does take account of price changes.for these items as. they are consumed by the population at large. Many people have proposed that the government do a better job of correcting any bias in the CPI, and then use the corrected CPI to adjust Social Security benefits. That is a different sort of proposal from those that would pay less than a corrected CPI.

4.3 Instead of having the cost of living adjustment, why can't the government lower the poverty line?

The cost-of-living adjustment is designed to measure the increase in living costs from year to year. Social Security benefits are then increased b the COLA to prevent the purchasing power of benefits from being eroded by inflation. Lowering the poverty line would have no impact on benefits, but would increase, in some cases, benefits that are tied to the poverty line in income-tested programs.

4.4 My understanding is that past wages are indexed to calculate average indexed monthly earnings for benefit purposes by using the average production workers' wage (maintained by the Bureau of Labor Statistics). Has any consideration been given to making all Social Security COLA benefit adjustments using this index rather than the CPI?

The Consumer Price Index has been viewed by policy experts as the best way currently available to measure the increase in the cost of living. A wage index would reflect the increases in wages, which is generally larger than the increase in the CPI and so this change would increase substantially the cost of the program. (The data used for indexing the earnings record are not from the BLS, but rather from income-tax data for all wage earners.)

4.5 How are COLA tied to the CPI?

The Consumer Price Index (CPI) is the measurement used to determine the cost-of-living adjustment (COLA) provided annually to Social Security beneficiaries to maintain the purchasing power of their benefits. This inflation protection is a feature of Social Security that is not often provided by pensions and annuities.

4.6 Why does the government give a disproportionate cost of living increase to Social Security beneficiaries in an election year?

This does not happen. The cost-of-living adjustment is automatic and, under law, is based on the increase in the Consumer Price Index (CPI) from the previous year.