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Benefits Could Get a Major Change Under New Bill

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A new bill could bring higher Social Security payments for seniors as it looks to update the way yearly benefits are calculated.

Seniors have complained for years that Social Security’s cost-of-living adjustment (COLA) doesn’t take into account the full inflation they face on health care, housing and groceries.

If the Boosting Benefits and COLAs for Seniors Act get passed, though, that all could change, and seniors would likely see higher yearly boosts to their benefits.

Senator Kirsten Gillibrand, a New York Democrat, proposed the bill to help seniors, who sometimes face higher inflation than the general population, reducing their purchasing power despite COLAs each year.

Senator Kirsten Gillibrand speaks during a news conference following a closed-door lunch meeting with Senate Democrats at the U.S. Capitol on October 31, 2023, in Washington, D.C. Gillibrand has introduced a new bill that could…

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“Social Security is a lifeline for older adults. For many, it’s their main source of income,” Gillibrand said in her Wednesday announcement of the bill. “But benefits aren’t keeping pace with rising costs, leaving many older Americans struggling to afford the basics—particularly health care.

“The Boosting Benefits and COLAs for Seniors Act would factor the high cost of health care into Social Security benefit calculations and help make sure recipients aren’t forced to choose between paying for their medication and buying other necessities.”

Today, the COLA for Social Security is calculated using the Consumer Price Index (CPI) for urban wage earners and clerical workers. Under the Boosting Benefits and COLAs for Seniors Act, that would be updated to reflect the CPI for the elderly, which includes the surging costs of health care more significantly, as this tends to impact seniors more than other Americans.

“The majority of older adults have already spent a lifetime working, saving, and contributing to Social Security,” Gillibrand said in a statement. “They deserve to retire in comfort and with funding. We can’t force Americans to choose between housing, financial security and healthcare.”

Alex Beene, a financial literacy instructor for the state of Tennessee, cautioned Social Security recipients from expecting a landslide boost in payments.

“This could be a blessing and a curse, in some ways,” Beene told Newsweek. “The promise of higher health care costs being a greater factor is certainly music to the ears of many seniors who are struggling with those increased prices. At the same point, it will be interesting to see how other costs of living are factored with the adjusted model. Hopefully, those other expenses will have the same generosity in calculation that health care is supposed to have.”

Kevin Thompson, a financial adviser and the founder and CEO of 9i Capital Group, said there are looming concerns about how the bill would impact the Social Security Administration’s expected insolvency, as well.

Experts have predicted that if nothing changes, Social Security will stop being able to send out full payments by 2033. The reason is that more baby boomers are entering retirement while fewer people are in the workforce, leading to insufficient funds to keep the program afloat.

“The fact you want to take more from the system that is currently being placed into the system will accelerate the looking insolvency,” Thompson told Newsweek. “To me, I want to do what is best for all people and coming to a solution that not only benefits seniors but also allows the sustainability for Social Security needs to be addressed.”