According to a recent analysis from The Senior Citizens League (TSCL), a nonpartisan group that represents the interests of senior citizens, the purchasing power of Social Security dollars has been falling precipitously since 2000.
In the “2018 Social Security Loss of Buying Power Study,” which included more than 1,000 seniors from across the country, participants were surveyed about their annual cost-of-living adjustment (COLA) and the expenses they’ve paid. The study determined that Social Security benefits have lost 34% of their purchasing power since the year 2000.
There are 45 million aged (62 years old or greater) beneficiaries who receive a monthly Social Security benefit and 62% of these recipients rely on this monthly check to provide at least half of their monthly income. Sadly, one-third of recipients rely on this payment for at least 90% of their monthly income. Also, according to data from the Social Security Administration, the average retired worker only received $1,412.14 in May 2018, or $16,946 a year.
TSCL notes that the average Social Security benefit has increased by 46% since 2000. However, the 39 costs it examined, which are representative of expenses that seniors often deal with, rose by an average of 96.3% over this same time period. Assuming an average benefit of $816 per month back in 2000, the typical retiree today needs $410 more a month from Social Security than they’re currently receiving just to be on par with where they were 18 years ago.
One of the contributing factors to the deterioration in the purchasing power of Social Security has to do with how inflation is calculated. Currently, COLAs are determined by the CPI-W and not the CPI-E (Consumer Price Index for the Elderly), which would more accurately account for expenditures that 62 years-old and older incur. The CPI-E isn’t perfect, but it is a far better measure for our Senior population. It doesn’t seem like changing the inflation index would be that difficult other than it would cost the Federal Government more each year.