Current Cost of Living Adjustments Overcompensate Retirees
Created on May 22, 2013
The current cost-of-living adjustment used to calculate Social Security benefits is a less accurate method of adjusting for inflation than the chained CPI. As a result, Social Security spending rises unnecessarily, which benefits maximum earners more than twice as much as the average retired worker.
Difference compared to chained CPI
2023 Current Index
2023 Chained CPI
AVERAGE RETIRED WORKER
MONTHLY BENEFIT PAYMENTS
MINIMUM WAGE RETIREE
MAXIMUM WAGE RETIREE
Notes: Some figures have been rounded. A maximum wage retiree is a worker who earned the Social Security taxable maximum income or higher in each of his or her working years. In 2011, the taxable maximum income was $106,800.
Source: Heritage Foundation calculations based on data from the Social Security Administration; U.S. Department of Labor, Bureau of Labor Statistics; and Congressional Budget Office forecasts.