Social Security Benefits Lose 23% of Buying Power Since 2000

June 17, 2016--Social Security beneficiaries have lost 23 percent of their buying power since 2000, according to the 2016 Survey of Senior Costs released today by The Senior Citizens League (TSCL).

The findings indicate that except for higher medical and prescription drug costs, overall prices have changed relatively little over the past year. Inflation remains very low, almost nil, mainly due to the dramatic drop in oil prices. “TSCL is concerned,” says TSCL Chairman Ed Cates.

“There appears to be a high risk of either an extremely low annual cost - of - living adjustment (COLA) next year, or worse — none at all,” he says.

Older Americans and disabled Social Security beneficiaries received no cost-of-living adjustment (COLA) in 2016 due to low inflation last year, but TSCL’s new survey found that lower inflation didn’t translate into lower household expenses in 2015.

In fact, nearly 1,200 survey respondents recently said that monthly household expenses made steep increases in 2015. The majority, 72%, indicated their monthly expenses went up by more than $79. “With today’s Social Security benefit averaging $1,230 per month, that’s an unsustainable level when there’s no benefit increase to match,” Cates says.

In most years, Social Security beneficiaries receive a small increase in their Social Security checks, intended to help them keep up with rising costs. But since 2000, the COLAs rose a total of just 36.3 percentage points while typical senior expenses have jumped 75.3 percent.

“Going without any COLA in 2016 has long-term consequences for retirees when real costs continue to climb,” Cates says. “People must spend down retirement savings more quickly than expected, and those without savings are either going into debt, or going without,” he says.

A person with average Social Security benefits in 2000 received $816 per month, a figure that rose to $1,166.30 by 2016. However, according to the survey, that individual would require a Social Security benefit of $1,430.50 per month in 2016 just to maintain his or her 2000 buying power, the study found.

The study examined the increase in costs of 38 key items between 2000 and January 2016. The items were chosen because they are typical of the costs that most Social Security recipients must bear. Of the 38 costs analyzed, 29 exceeded the amount of increase in the COLA over the same period. The selected items represent eight categories, weighted by approximate expenditure.

“This study illustrates why Congress should enact legislation to provide an emergency COLA this year,” says Cates. “To put it in perspective, for every $100 worth of expenses seniors could afford in 2000, they can afford just $77.00 today,” Cates adds.

A majority of the 57 million senior and disabled Americans who receive Social Security depend on it for at least 50 percent of their total income, and one in four beneficiaries relies on it for 90 percent or more of his or her total income.

To help protect buying power of benefits, TSCL supports legislation that would base COLAs on the Consumer Price Index for the Elderly. TSCL and its members are lobbying Congress for an emergency COLA for 2016. To learn more, visit http://www.SeniorsLeague.org.

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With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit http://www.SeniorsLeague.org for more information.

Top 10 Growing Costs for Older Consumers

March 14, 2016– Even though inflation was too low for a cost – of – living adjustment (COLA) this year, a number of crucial items that older consumers typically buy jumped in cost, according to a new chart released today by The Senior Citizens League (TSCL). “These cost increases are forcing older consumers to make difficult choices,” says TSCL Chairman, Ed Cates. 

 “In the years when Social Security benefits don’t keep up with rising costs, people living on fixed incomes are forced to spend retirement savings faster than planned or worse, go into debt, just to make ends meet,” says Cates.

The following chart illustrates ten of the biggest cost increases over the past year in items most likely to be found in a typical retiree’s household budget.

“While the majority of Medicare beneficiaries did NOT have an increase in their Medicare Part B premiums this year, about one – third pay 16 percent more in premiums than they paid last year — one of the biggest increases in Medicare premiums on record,” Cates says.

“This especially affects people who have delayed the start of their Social Security benefits and pay for their Medicare by check,” Cates explains.  Over time however, TSCL studies indicate that Medicare Part B premium, increases are one of the top fastest – growing costs during most retirement years.

Prescription drug costs are another category that TSCL is receiving a lot of comments about from people age 60 and over. 

“There have been several back – to – back years recently of extreme prescription drug price spikes,” Cates says.  TSCL used data from Truveris, a healthcare data company that tracks thousands of drug prices, which showed that prescription drug prices rose 10.43 percent in 2015.  TSCL supports legislation that would allow Medicare greater authority to negotiate drug prices.

The cost of eating a more healthy diet rose while the cost of foods higher in fat and cholesterol like processed meats and cheese tumbled.  The cost of a pound of tomatoes rose 8.1 percent, almost as much as the average increase in prescription medicines.

Although the cost increase of doctor visits was one of the slower growing increases at 2.3 percent, the price of veterinarian care for pets rose 4.1 percent, nearly double the rate of physician costs. 

TSCL believes that’s due to the effect of insurers negotiating discounts from doctors for human care.  But the same is not so much the case with pet medical care because most people don’t have insurance for the pets.

“The takeaway is that, although the huge drop in fuel oil costs is only one area of spending, it’s big enough to drive down the COLA — even though older Americans drive less as they get older,” Cates says.  Research for TSCL indicates that using a seniors CPI — like the Consumer Price Index for the Elderly (CPI-E) — would pay a higher COLA in most years, even in 2016.  TSCL is lobbying for an Emergency COLA, as well as legislation that would pay a more fair and accurate COLA by switching to the CPI-E.

How are you affected by rising costs?  Take TSCL’s annual Senior Survey— visit www.SeniorsLeague.org.