In 2021, Social Security retirees are getting a cost-of-living adjustment (COLA), better known as a Social Security raise. That's the good news. The bad news is, it's the smallest COLA since 2017, and retirees will get only a 1.3% bump in their benefit. For a senior receiving the average benefit of $1,523 in December of 2020, benefits will go up about $20 to $1,543, which isn't exactly a hefty increase.

Some experts believe these raises are too small because the wrong metric is used to determine the amount of the increase. President-elect Joe Biden is one of them. He has a plan to change the way Social Security raises are calculated. If the plan had been in effect already, here's what your raise would have looked like for 2021. 

U.S. White House.

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Here's how much extra seniors would've received under Biden's plan

One of the key changes President-elect Biden has suggested for Social Security is a switch to the consumer price index that's used to calculate Social Security raises. 

See, annual cost-of-living-adjustments are currently determined using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If CPI-W shows prices rising during the third quarter of the year, seniors will get a benefits boost. Specifically, the CPI-W for July, August, and September of 2019 was compared with the CPI-W for the same months in 2020 to determine the COLA for 2021, resulting in seniors getting a 1.3% raise in 2021. 

Unfortunately, senior spending patterns tend to differ from urban wage earners and clerical workers, so CPI-W most likely underestimates the amount of inflation seniors actually experience. That's because older Americans tend to spend more on things such as medical care and housing, where prices tend to rise more quickly than on many consumer goods that are weighted more heavily on the CPI-W index. 

President-elect Biden has proposed making a change to a different consumer pricing index that's built around the spending of elderly Americans, which is called CPI-E. Making this switch from CPI-W to CPI-E would make the COLAs around .2 percentage points higher each year. That would mean that instead of seniors getting a 1.3% raise in 2021, they'd get a 1.5% raise. 

That extra .2 percentage points definitely isn't nothing. But it's also not that much, either -- especially since many seniors don't receive very large benefits to begin with. In December 2020, the average benefit is just $1,523. Under the current COLA calculations, a senior with an average benefit will see it go up around $20.00 per month next year. If Biden's plan had already been in effect in 2021 and CPI-E was instead used to calculate the COLA instead of CPI-W, the same senior would instead get a benefits increase of around $22.85 per month. That's about $34 more per year using CPI-E vs. CPI-W. 

Of course, over the entirety of a retirement, those small extra raises will add up to a reasonable amount of money. And Mr. Biden also has other plans to raise Social Security benefits for some Americans, especially those with lower incomes. Still, seniors can't assume that a simple shift to the way COLAs are calculated is going to put a lot of extra money in their pockets.

The bottom line is, Social Security raises are never going to be large ones, and retirees need to make sure they have enough money available to supplement their benefits throughout the entirety of their retirement as periodic COLAs aren't going to mean they'll have a huge Social Security benefit later in life.