A Proposed Social Security Change Could Mean Bigger Raises for Retirees

When the 3.6% cost-of-living adjustment (COLA) was announced on October 14, millions of Americans receiving Social Security senior benefits learned that they'd receive a benefits boost next year. Though the cost-of-living adjustment (COLA) helps Social Security senior benefits keep up with inflation, some industry experts argue the COLA should be larger, and the method used to calculate it should be changed. Two bills, neither of which have passed, seek to change that formula and provide Americans with more benefits.

Here's what you should know about the COLA, why it might not actually be keeping up with inflation, and the proposed changes that might increase Social Security benefits.

How the COLA is calculated

The Social Security Administration (SSA) calculates the COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers, the CPI-W. The SSA compares third-quarter CPI-W to the data from the same period in the previous year. If the current year's data is higher, it signifies inflation has occurred, and the COLA, a percentage, is applied to benefits beginning in January of the following year.

The problem with the current COLA calculation

The current COLA calculation has drawn criticism from groups like Social Security Works, a political advocacy group. "The COLA adjustment will help. But it doesn't fully account for the costs that Social Security beneficiaries face," said Nancy Altman, President of Social Security Works, after the 2027 COLA's announcement. "That's because the measure used to calculate it, the CPI-W, is designed to reflect the costs of working people — not retirees, who spend a higher percentage of their income on healthcare, housing, and other bare necessities."

The CPI-W tracks spending habits of workers, often who are younger and healthier than retirees, and it may not accurately reflect the spending of retirees. For example, the CPI-W may underweight certain spending categories, like healthcare, in which seniors spend more money. Additionally, healthcare expenses tend to increase faster than standard inflation, meaning the CPI-W may not fully keep up with seniors' spending.

The Boosting Benefits and COLAs for Seniors Act

Democratic Representative Nikki Budzinski introduced the Boosting Benefits and COLAs for Seniors Act in October 2025 in an attempt to ensure that benefits better reflect seniors' needs. The bill proposes that the SSA should use either the CPI-W or the Consumer Price Index for Elderly Consumers, the CPI-E, whichever is higher.

The CPI-E reflects the spending habits of Americans aged 62 and older. It's an experimental price index and, though it may often outpace the CPI-W, there are years when the CPI-E might be lower than the CPI-W. Since the bill would require the use of whichever price index is higher in a given year, it might help maximize benefits.

The Social Security Expansion Act

Independent Senator Bernie Sanders has also introduced the Social Security Expansion Act in February 2025. The bill seeks to replace the existing CPI-W price index with the CPI-E price index.

Sanders' proposal to change the COLA calculation is just one part of a package that also proposes Social Security benefit increases and implementing Social Security payroll taxes on earnings above $250,000 to help generate additional revenue for the program.

The potential benefits increase using the CPI-E

According to The Senior Citizens League's October 2025 analysis, an average individual who retired in 1999 might have received almost $5,000 more during a 25-year retirement if their Social Security benefits had been calculated using the CPI-E than the CPI-W.

The analysis also projected that an individual retiring in 2024 might receive over $12,000 in additional benefits across a 25-year retirement with the CPI-E if long-term inflation patterns continue.

The analysis found that the CPI-E generated a smaller benefits increase in 2019, 2022, and 2023 than the CPI-W, but overall, the CPI-E usually resulted in a larger benefits increase.

The potential downsides to using the CPI-E

Switching to the CPI-E has its potential drawbacks. According to the Bureau of Labor Statistics, the CPI-E is created on a small sample, so it might not fully represent retirees and their spending habits.

Using the CPI-E may also increase Social Security costs. The SSA estimates that using the CPI-E beginning in December 2028 might increase the annual COLA by about 0.15 percentage points, but it might also worsen the 75-year actuarial balance by 0.33% of taxable payroll. That financial hit could come as Congress is already tasked with finding a solution to prevent Social Security's approaching trust fund insolvency.

Bottom line

Neither proposed bill has been signed into law, and at this time, the idea of using the CPI-E remains a proposal, not a planned change. The 2027 COLA should increase Social Security benefits by an average of $75 per month in 2027, meaning nearly 72 million Social Security beneficiaries should see that boost. The increase begins in January 2027 for Social Security beneficiaries, while individuals receiving Supplemental Security Income (SSI) should see their increase begin on December 31, 2026.

You may access your COLA notice, including your 2027 benefit amount, by logging into your my Social Security account and signing up for paperless billing beginning in late November. Once you've identified your monthly benefit amount, you may want to revisit your retirement plan and budget to make any adjustments needed.

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