Social Security benefits have lost 34 percent of buying power since 2000, according to the 2018 Social Security Loss of Buying Power Study released this week by The Senior Citizens League, a nonpartisan senior citizen’s action group.
The study’s findings represent a significant one-year loss of 4 percentage points in buying power, with the loss increasing from 30% to 34% from January 2017 to January 2018. According to the study, the loss occurred even though beneficiaries received a 2% annual cost-of-living adjustment (COLA) for 2018. The study examines the growth, since 2000, in the price of goods and services that are typical for retired and disabled households, and compares that to the growth in Social Security benefits due to annual COLAs.
Group Estimates 2019 COLA Could Top 3.3%
The loss of buying power is an early indicator of whether the Social Security COLA will climb in the following year. Based on consumer price index (CPI) data through May of this year, The Senior Citizens League estimates the COLA for 2019 will be about 3.3%, the highest since 2012. However, that number could change, since there are still several weeks of price data to be released before the Social Security Administration announces the COLA in mid-October.
The survey was conducted from January through March of this year to more than 1,057 respondents. Participants confirmed that monthly household expenses made steep increases over the past year, far in excess of the dollar amount that their COLAs increased benefits. More than half, 56%, indicated their monthly expenses went up by more than $79. Yet 50% of survey respondents said that their COLA increased benefits less than $5 per month, after the increased Part B premium for 2018 was deducted from their Social Security benefits.
The study found that since 2000, COLAs increased benefits a total of just 46%, while typical senior expenses have jumped 96.3%.
Top 10 Fastest Rising Costs for Seniors
A more detailed look at the top 10 costs that are rising the fastest can be found here.
The study examined the increase in costs of 39 key items between 2000 and January 2018. The items were chosen because they are typical of the costs of most Social Security recipients, and include expenditures like Medicare Part B premium, that are not measured by the index currently used to calculate the COLA. Of the 39 items analyzed, 26 increased faster than the COLA over the same period. “This study illustrates why Congress should enact legislation to provide a more fair and adequate COLA,” says The Senior Citizens’ Executive Director, Shannon Benton. “To put it in perspective, for every $100 worth of groceries a retiree household could afford in 2000, they can only buy $66 worth today,” Benton adds.
Established in 1995, The Senior Citizens League is a nonpartisan senior citizens’ action group with 1.2 million supporters. It supports legislation that would base COLAs on the Consumer Price Index for the Elderly (CPI-E). The National Active and Retired Federal Employees Association (NARFE) also supports a switch to the Consumer Price Index for the Elderly (CPI-E), which it believes would result in higher COLAs and it opposes a switch to the Chained CPI, which would result in lower COLAs.