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Current Cost-of-Living Adjustments Overcompensate Retirees

Created on November 20, 2014

Current Cost-of-Living Adjustments Overcompensate Retirees

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Read the original report, "The IMF’s Analysis of the U.S. Economy: Faulty Assumptions and Bad Policy Advice," by James M. Roberts.

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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.

Source: Heritage Foundation calculations based on data from Social Security Administration; U.S. Department of Labor, Bureau of Labor Statistics; and Congressional Budget Office forecasts.

CHART 5 • BG 2976

Tags: International-Monetary-Fund, IMF, Social-Security, chained-CPI