Summary of Provisions That Would Change the Social Security Program
Description of Proposed Provisions:
Cost-of-Living Adjustment
Estimates based on the intermediate assumptions of
the 2024 Trustees Report
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|
Change from current law [percent of payroll] |
Shortfall eliminated | |||||
|---|---|---|---|---|---|---|
|
Long-range actuarial balance |
Annual balance in 75th year |
Long-range actuarial balance |
Annual balance in 75th year |
|||
| Current law shortfall in long-range actuarial balance is 3.50 percent of payroll and in annual balance for the 75th year is 4.64 percent of payroll. | ||||||
| A1 |
Starting December 2025, reduce the annual COLA by 1 percentage point.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board 2005) |
1.95 | 2.54 | 56% | 55% | |
| A2 |
Starting December 2025, reduce the annual COLA by 0.5 percentage point.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board 2005) |
1.01 | 1.33 | 29% | 29% | |
| A3 |
Starting December 2025, compute the COLA using a chained version of the consumer
price index for wage and salary workers (CPI-W). We estimate this new computation
will reduce the annual COLA by about 0.3 percentage point, on average.
graph | table | pdf-graph | pdf-table | memo (Ribble 2016) | memo (FY 2014 Budget) | memo (Chaffetz 2011) | memo (Becerra 2011) | memo (Fiscal Commission 2010) | memo (Bipartisan Policy Center 2010) | memo (Social Security Advisory Board 2005) |
0.62 | 0.82 | 18% | 18% | |
| A4 |
Starting December 2027, compute the COLA using a chained version of the consumer
price index for wage and salary workers (CPI-W). We estimate this new computation
will reduce the annual COLA by about 0.3 percentage point, on average. The new COLA
will not apply to DI benefits. It will apply to OASI benefits, except for those
of formerly disabled-workers who converted to retired-worker status.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA 2010) |
0.49 | 0.66 | 14% | 14% | |
| A5 |
Starting December 2025, add 1 percentage point to the annual COLA for beneficiaries
who have lived past a "specified age". The "specified age" is the sum of: (1) 65 and
(2) the unisex cohort life expectancy at age 65.
graph | table | pdf-graph | pdf-table | memo (Senate Special Committee on Aging 2010) |
-0.13 | -0.14 | -4% | -3% | |
| A6 |
Starting December 2026, compute the COLA using the Consumer Price Index for the Elderly
(CPI-E). We estimate this new computation will increase the annual COLA by about 0.2 percentage
point, on average.
graph | table | pdf-graph | pdf-table | memo (Hirono, Tokuda 2024) | memo (Sanders 2023) | memo (Deutch, Hirono 2022) | memo (Sanders, DeFazio 2022) | memo (Lawson 2021) | memo (Larson, Blumenthal, Van Hollen September 2019) | memo (Deutch, Hirono 2019) | memo (Sanders, DeFazio 2019) | memo (Larson, Blumenthal, Van Hollen January 2019) | memo (Deutch, Hirono 2017) | memo (Lawson 2017) | memo (Larson 2017) | memo (Sanders, DeFazio 2017) | memo (Sanchez 2016) | memo (Sanders 2016) | memo (Schatz 2015) | memo (Deutch 2015) | memo (DeFazio 2015) | memo (Sanders 2015) | memo (Larson 2015) | memo (Larson 2014) | memo (Harkin 2013) | memo (Harkin 2012) | memo (Becerra 2011) | memo (Deutch 2010) |
-0.42 | -0.57 | -12% | -12% | |
| A7 |
Starting December 2025, reduce the annual COLA by 1 percentage point, but
not to less than zero. In cases where the unreduced COLA is less than 1 percentage
point, do not carry over the unused reduction into future years.
graph | table | pdf-graph | pdf-table | memo (Hutchison 2011) |
1.83 | 2.39 | 52% | 52% | |
| A8 |
Starting December 2025, for OASI beneficiaries only (DI beneficiaries would
only be affected when their benefit converts to OASI at NRA), the annual COLA
would be based on the chain-weighted version of the CPI-U.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.55 | 0.71 | 16% | 15% | |
| A9 |
For single/head-of-household/married-filing-separate taxpayers with modified
adjusted gross income (MAGI) below $110,800 and for joint filers with MAGI below
$221,500 for December 2026 ($85,000 and $170,000 multiplied by estimated CPI-U
for 2018-2026), use the chain-weighted version of the Consumer Price Index for
All Urban Consumers (C-CPI-U) to calculate the cost-of-living adjustment (COLA),
beginning with the December 2026 COLA. For those beneficiaries whose MAGI is
above these thresholds, provide no COLA. Use prior tax year income data for
this determination. Use the chain-weighted CPI for the COLA for years prior to
benefit receipt. Index the eligibility income threshold amounts to the CPI-U
after December 2026.
graph | table | pdf-graph | pdf-table | memo (Johnson 2016) |
1.30 | 2.27 | 37% | 49% | |