Social Security Bill Swaps COLA Formula for Seniors, Adds High-Earner Wages to Future Benefits Post-2025

The “Protecting and Preserving Social Security Act” is basically a two-part tune-up for how your retirement benefits are calculated, affecting both how much your check grows each year and how your highest earnings factor into your final benefit amount.

Title I: The COLA Switch-Up

Title I tackles the annual Cost-of-Living Adjustment (COLA)—the yearly bump meant to keep your benefits from getting eaten alive by inflation. Currently, that bump is based on a general inflation measure. This bill changes that by mandating the creation of a new index: the Consumer Price Index for Elderly Consumers (CPI-E). The Bureau of Labor Statistics (BLS) is authorized to receive the necessary funding to start publishing this index monthly, starting roughly a year after the bill becomes law (Sec. 101).

Why does this matter? The CPI-E is designed to track what people 62 and older actually spend money on—things like medical costs and housing, which often rise faster than, say, the price of new electronics. For current and future retirees, this means the annual COLA calculation will now use the CPI-E, which is widely expected to result in slightly higher annual benefit increases than the current formula (Sec. 102).

There’s a critical protection baked into this change: If your Social Security benefit (Title II) goes up because of this new COLA calculation, that increase will not count as income or resources when state agencies determine your eligibility for needs-based programs like Supplemental Security Income (SSI) or Medicaid (Sec. 102). This is huge. It means seniors on the financial edge won't be penalized for getting a more accurate COLA, protecting their access to essential healthcare and income support.

Title II: Tapping the Top of the Pay Scale

Title II is where things get complicated, primarily affecting high earners and future beneficiaries starting in 2026. This section changes how wages earned above the Social Security contribution and benefit base (the annual cap on earnings subject to Social Security tax) are treated. If you’re a high earner, a portion of your wages above that cap will now be factored into the system, both for tax purposes and for calculating your final benefit (Sec. 201).

This is done through a complex formula involving an “applicable percentage” of those excess wages. The key takeaway is that after 2025, the highest earners will see some of their wages above the current cap counted as “surplus earnings.”

The Surplus Earnings Benefit Bump

Why count those surplus earnings? Because the bill also tweaks the Primary Insurance Amount (PIA) formula—the core calculation that determines your monthly benefit check. For anyone who becomes eligible for benefits after 2025, the formula will now include a small percentage of those surplus earnings, calculated as “Surplus Average Indexed Monthly Earnings” (SAIME) (Sec. 202).

Specifically, the formula adds: 3 percent of your SAIME up to a certain threshold, plus 0.25 percent of the SAIME above that threshold. While these percentages are small, they represent the first time that earnings above the contribution base will be explicitly factored into the benefit formula. For a software engineer or a corporate executive who consistently earned far above the wage base throughout their career, this means their future Social Security benefit will be slightly higher than it would have been under the old rules, crediting them for those previously untaxed/uncounted earnings.