Why Inflation is Hitting Seniors Harder
The 2023 Social Security cost-of-living adjustment was the highest it’s been in 40 years. However, even that 8.7% benefits boost is not enough to keep up with the rising costs retirees face. A recent article by CNBC reported that far too many Social Security recipients are struggling to keep up with inflation.
This is not a new thing. Research shows beneficiaries have lost 36% of their buying power since 2000. To be able to live as well on Social Security benefits as at the turn of the century, today’s retirees would need an extra $516.70 per month. That’s because the cost of goods and services has skyrocketed, increasing more than 141%.
The fastest growing costs for older Americans are grocery items like eggs (up 332% since 2000), medical expenses such as prescription drug costs (up 311%) and dental visits (up 275%), as well as homeowner costs including insurance (up 193%) and utilities (heating oil up 279% and propane up 167%). Additionally. the cost of gasoline jumped 167%. It even costs substantially more to be a pet owner (pet services including veterinary costs up 190%)
Calls for a New COLA Calculator
Inflation may be subsiding a bit, but the costs of goods and services are still high. That means seniors relying on Social Security benefits will still struggle financially next year. Making matters worse, experts are predicting only a 3.1% cost-of-living adjustment (COLA). This is spurring calls for a new COLA calculator.
Right now, COLA is calculated using the consumer price index for Urban Wage Earners and Clerical Workers, or CPI-W. It reflects price changes for a group of goods and services bought by working people, not retirees. Many senior advocates have argued that other measurements would better reflect retirees’ costs, such as the Consumer Price Index for the Elderly, or CPI-E, stating that would be a better gauge for the annual cost-of-living adjustment.
The issue is that inflation affects retirees differently. Seniors tend to spend more on health care and housing than on food, beverages, and transportation.
Our Solution
Many lawmakers – along with The Seniors Trust – think the CPI-E should be used instead of the CPI-W because it is a better gauge of the actual inflation experienced by seniors. We believe switching to using the CPI-E would provide retirees with a much fairer cost-of-living adjustment
Changing the COLA calculator is just one of the main tenets of the Social Security Expansion Act. This landmark piece of legislation would also provide retirees with an immediate Social Security benefits boost. It calls for increasing monthly benefits by about $200 on average, which would help put more money in the pockets of deserving retirees.
