Social Security is supposed to increase with the rate of inflation every year, but a new analysis indicates Social Security recipients are falling behind.
According to the Senior Citizens League,people who retired before 2000 have lost 36% of their buying power. On average, these retirees, generally over age 85, would need an extra $516 a month to maintain the same buying level as 2000.
The reason is that the prices of items that seniors typically buy have increased faster than other items. According to the Senior Citizens League, Social Security’s cost-of-living adjustments have raised payments by 78% from January 2020 through February 2023. But the organization says the prices of items typically purchased by seniors have jumped 141%.
The Senior Citizens League said that in 2000, the average Social Security payment was $816. This year, it’s $1,453. To keep up with inflation, the amount needed would be $1,969.
The cost of some items commonly purchased by seniors has more than tripled in the last 23 years. Those items include eggs, prescription drugs, heating oil, dental care and Medicare Part B premiums.
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The Social Security Administration says it bases its cost-of-living adjustment on the consumer price index for urban wage earners and clerical workers. The Bureau of Labor Statistics releases consumer price index data monthly. As of April 2023, the consumer price index is up 4.9% compared to the year prior.
The consumer price index weighs the costs of goods based on their importance. Items like food, shelter and energy tend to be weighted more heavily.
The last cost-of-living adjustment came in December 2022 when the Social Security Administration increased payments by 8.7%. The next cost-of-living adjustment will be announced in October and will take effect two months later.
With the inflation rate declining, the Senior Citizens League estimates that Social Security payments for 2024 will go up by 3.1%.
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