Social Security benefits have lost 30% of buying power since 2000, according to the latest Social Security Loss of Buying Power study released last week by The Senior Citizens League (TSCL). “This year’s study found a three percentage point gain in the buying power of Social Security benefits over 2019,” says study author Mary Johnson, a Social Security policy analyst for the League. “That should indicate that most retirees may have seen at least some prices come down on certain items.”
However, based on consumer price index (CPI) data through April of this year, Johnson estimates that the COLA for 2020 will be zero.
The study, which examined price changes from January of 2019 to January of this year, found that, since 2000, the buying power of
Social Security benefits improved three percentage points in 2020—from a loss of 33% as of 2019 to 30% in 2020.
Between January of 2000 and January of 2020, Social Security COLAs increased Social Security benefits by 53%, but the costs of goods and services purchased by typical retirees rose almost twice as much—99.3%. Medicare premiums and out-of-pocket costs, housing, and homeowner’s insurance were among the most rapidly rising costs over the past year.
Participants in The Senior Citizens League’s surveys indicate that household medical expenses consume a significant portion
of their monthly income. More than 39% of respondents to a recent survey say that they spend more than $750 per month on all Medicare and other health care costs. In 2020, the average Social Security benefit is $1,460. The 1.6% COLA raised the average Social Security benefit by only $23.40 per month this year.
A person who retired in 2000 with an average Social Security benefit of $816 per month would have $1,246.20 per month by 2020. However, because retiree costs are rising at a substantially faster pace than the COLA, that individual would require a Social Security benefit of $380.00 more per month, or a total of $1,626.20 in 2020, just to maintain his or her 2000 level of buying power.
“To put it in perspective, for every $100 worth of groceries a retiree could afford in 2000, they can only buy $70 worth today,” Johnson adds.
To help protect the buying power of benefits, TSCL supports legislation that would provide a modest boost in benefits and base
COLAs on the Consumer Price Index for the Elderly (CPI-E) or guarantee a COLA no lower than three percent. You can read the full press release here.