Have you ever wondered how Social Security Cost-of-Living Adjustments (COLAs) have varied over the years?
These adjustments have fluctuated significantly since their inception in 1975, reflecting changes in inflation and economic conditions. Initially, COLAs were introduced to counteract inflation’s eroding effect on benefits. But they have not been consistent.
This amazing chart from The Motley Fool provides us a glimpse at the numbers throughout the decades. Nearly half a century later, we can see these boosts are still not where they need to be. This is especially true given the amount of money that workers have faithfully paid into the program.
How COLAs Have Changed Over the Years
The 1970s and early 1980s saw some of the highest COLAs, with peaks like 14.3 percent in 1980, due to high inflation rates driven by oil shocks and economic instability.
In contrast, the 1990s and 2000s experienced more moderate COLA increases, often ranging between 2 and 4 percent, as inflation rates stabilized. Economic factors such as the dot-com boom and subsequent bust, and later, the housing market crisis, influenced these adjustments. The Great Recession of 2007-2009 led to years with very low inflation, resulting in no COLA in 2010, 2011, and 2016.
The method for determining COLAs relies on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index measures inflation, impacting the annual adjustment. Recent years have seen COLAs fluctuating again due to varied economic conditions, with 2022 marking a significant increase of 5.9 percent, driven by pandemic-related economic disruptions and rising consumer prices.
Overall, Social Security COLAs reflect the broader economic landscape, aiming to ensure that benefits maintain their purchasing power amidst changing inflationary pressures.
But there is another solution we can pursue. The answer lies in returning Social Security to its roots as a Trust Fund. While benefits would still need to be adjusted for inflation, this would solve the problem of potential insolvency.
Will you stand with us on this crucial issue? If so, sign our petition today.
