Social Security has already lost 23 percent of its buying power since 2000, and another potential year of no cost-of-living increase could squeeze seniors — whose expenses haven’t lowered with low inflation.
That’s according to the Alexandria, Va.-based Senior Citizens League, which released its "2016 Survey of Senior Costs" indicating that, except for higher medical and prescription drug costs, overall prices have not changed much over the past year, keeping inflation close to nil.
While that price stability comes mainly thanks to tanking oil prices, other expenses in the survey have not fallen. So although the low inflation rate looks good, it means bad news to the organization, which points to “a high risk of either an extremely low annual cost-of-living adjustment next year, or worse — none at all.”
Older Americans and disabled Social Security beneficiaries got no cost-of-living adjustment last year, but that doesn’t mean that low inflation translated to them having an easier time of it paying their bills. Nearly 1,200 survey respondents said their monthly household expenses rose steeply in 2015. And 72 percent said those monthly expenses rose 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,” Ed Cates, chairman of the Senior Citizens League, said in a statement. In most years, beneficiaries do receive a small cost-of-living adjustment increase, but the seniors organization pointed out that, since 2000, the cost-of-living adjustments rose a total of just 36.3 percentage points while typical senior expenses have jumped 75.3 percent.
The study examined the increase in costs of 38 key items between 2000 and January 2016 in the eight categories of housing, transportation, medical, food, recreation, communication, apparel and other, weighted by approximate expenditure.
Items such as rent, car maintenance/repair, generic prescription drugs, ground chuck, eggs, potatoes and basic land line phone service were chosen “because they are typical of the costs that most Social Security recipients must bear,” the organization said. Of the 38 costs analyzed, 29 exceeded the amount of increase in the cost-of-living adjustment over the same period.
A person with average Social Security benefits in 2000 received $816 per month; by 2016, that had risen to $1,166.30. However, survey results indicate that a person receiving average benefits would require $1,430.50 per month in 2016, just to have the same buying power that $816 check brought in 2000.