Flat-rate COLA draws fierce debate: a universal boost or a hidden cut for most retirees?
USA TODAY reports on a revived flat-rate COLA proposal that would award all beneficiaries the same dollar increase, based on the 20th percentile. Proponents say it would be highly progressive and could extend solvency, while critics—led by AARP—warn that about 80% of beneficiaries would lose purchasing power over time, with middle-income retirees and those aging into poverty hardest hit; the average beneficiary could lose roughly $285 per year under such a plan. The Social Security trust fund could run dry by 2032, after which benefits would have to be reduced by about 22% unless reforms are enacted. Other options discussed include raising the payroll tax cap or applying payroll taxes to higher earners to fund higher benefits.