MINNEAPOLIS (WCCO) — More than 50 million Americans get a social security check every month. But some Democrats and liberal groups are upset about a proposed change in the way the cost of living adjustment is calculated. Making a switch could save more than $100 billion in 10 years.

So how are Social Security benefits calculated?

“There is a very complicated, neat formula social security uses,” said professor Larry Jacobs of the University of Minnesota’s Humphrey School of Public Affairs.

The Social Security Administration takes 35 years of salaries. The formula pays you a percentage of the average monthly income.

“They weight it a little if you’re lower income, so you get a little bit better return,” Jacobs said.

Every year you get a cost-of-living raise. Right now, it’s tied to the Consumer Price Index (CPI), which is the key measure of inflation.

Some want inflation to be tracked using a different measure of inflation, called the Chained CPI.

“The basic idea of Chained CPI is: You’re in the store, the price of a brand of bread you like starts going up, you look for a different brand of bread that’s less expensive,” Jacobs said.

Both stats are computed by the Bureau of Labor Statistics. The current CPI is created using a basket of 200 different products and services, including cereal, apples, men’s shirts, and prescription drugs.

The Chained CPI is similar, but different.

“[It would] adjust the cost of living calculation for Social Security to take into account that people make decisions to search out the lower cost item,” Jacobs said.

Historically, there have been many changes to Social Security, according to Jacobs. The retirement age has gone up, the benefit percentages have changed, and payroll taxes have gone up as well.

But experts disagree with how big of a deal it is to switch to chained CPI, because, right now, it’s not that different from the regular one.

However, little changes matter. If you cut everyone’s monthly benefit by $1 a month, that’s $646 million a year.

Jason DeRusha

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