For many retired Americans, Social Security is more than just a monthly payment—it’s a lifeline. On average, a retired worker receives around $2,000 per month, though some may receive more or less depending on their earnings history.
But let’s be honest—whether you get more or less, most people wouldn’t mind seeing bigger checks. The good news is, certain policy changes could help make that happen. Here are two proposed changes that could put more money in seniors’ pockets.
1. A Better Formula for COLA Increases
The government adjusts Social Security payments every year using something called a Cost-of-Living Adjustment (COLA). This is meant to help seniors keep up with rising prices.
Currently, COLA increases are calculated using the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers). But this system has two big flaws:
- It’s based on working people’s expenses, not retirees.
- It focuses on urban living costs, while many seniors live in rural areas.
This means the COLA often doesn’t reflect real-life expenses faced by older people, such as higher healthcare costs. As a result, retirees lose out on buying power over time.
The solution? Use a senior-focused index, such as the CPI-E (Consumer Price Index for the Elderly). This index tracks the actual expenses of older people and could result in higher yearly increases for Social Security benefits.
2. A Fairer System for Taxing Benefits
Another issue many seniors face is taxes on their Social Security payments. Yes, even after working for decades, retirees can still be taxed on their benefits.
Here’s how it works:
Your “combined income” determines whether your Social Security is taxable. It includes:
- 50% of your annual Social Security income
- Your annual adjusted gross income (AGI)
- Any tax-free interest (like from some bonds)
If you are:
- Single, and your combined income is $25,000 or more, you’ll pay taxes
- Married, the threshold is $32,000
These limits have not increased for decades, even though living costs and wages have gone up. Many seniors now get taxed simply for having modest savings or part-time income.
What could change?
Lawmakers might:
- Raise the income thresholds to better match today’s economy
- Remove Social Security income from the formula, so benefits are not counted as income when calculating taxes
Either change would mean more money stays in seniors’ hands instead of going back to the government.
These policy ideas aren’t law yet, but they’re being discussed. If approved, they could make a big difference in the lives of older Americans. A better COLA system and fairer tax rules would help retirees maintain their independence and meet rising expenses without cutting back on basic needs. As the cost of living continues to rise, it’s more important than ever for lawmakers to make the system fair and supportive for those who depend on it the most.
