A 1987 idea could have saved Social Security - thestreet.com

What the report says

TheStreet is reporting on a renewed look at a Social Security policy proposal first raised in 1987: changing the way annual cost-of-living increases are distributed, potentially through a flat-dollar adjustment rather than a percentage-based one. Based on the publisher’s headline and snippet, new estimates attempt to measure the financial effect on retirees of not adopting that idea over roughly four decades.

The full public article text was not available in the supplied material, so the specific estimates, authors and methodology could not be summarized from TheStreet’s reporting. The broader issue is how Social Security cost-of-living adjustments, or COLAs, are calculated. Under current practice, inflation adjustments are applied as a percentage of each beneficiary’s payment, which means people with higher monthly benefits receive larger dollar increases than those with smaller checks.

A flat-rate COLA would instead provide the same dollar increase to beneficiaries, or otherwise make inflation protection less dependent on the size of a person’s existing benefit, depending on the exact design. Supporters of such approaches generally argue they could better protect lower-benefit retirees and people who rely most heavily on Social Security. Critics may raise questions about fairness, costs and how changes would interact with the program’s earned-benefit structure.

TheStreet’s framing suggests the long delay in revisiting the 1987 concept is relevant to current debates over Social Security’s adequacy and finances. The issue matters because even small differences in COLA design can compound over years of retirement, shaping household income and poverty risk for older Americans.