Fair COLA for Seniors Act Introduced
On February 1, Rep. John Garamendi, D-CA, reintroduced the Fair COLA for Seniors Act. The bill would provide more accurate COLAs for federal retirees by calculating COLAs using the Consumer Price Index for the Elderly (CPI-E), which better tracks the spending habits of seniors than the current methodology. In a letter of endorsement, NARFE National President William Shackelford expressed NARFE’s support for the legislation.
Under the current COLA calculation method, which is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), retirees lose purchasing power due to underestimated inflation. The CPI-W tracks the spending habits of the urban workforce, thus inadequately assessing the differences in costs for the goods and services seniors frequently purchase. For example, medical care costs for seniors are double the rate of the general population.
The CPI-E, in contrast, only tracks the spending habits of Americans age 62 and older thus better representing federal retirees and the costs associated with living on a fixed income. When measuring costs experienced by seniors with the CPI-E, inflation is greater by an estimated 0.27 percent per year than what the CPI-W shows, highlighting the need for Congress to take up this key legislation.
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