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A Social Security policy analyst for the advocacy group The Senior Citizens League is estimating the cost-of-living adjustment for 2021 will be zero based on consumer price index data through April and the continued impact of COVID-19 on the economy.

"The recent unprecedented plunge oil prices have all but wiped out the prospect of a Social Security cost-of-living adjustment (COLA) for next year," Mary Johnson, the policy analyst, said in a statement. The Senior Citizen League's estimate of no adjustment could change before October, when the Social Security Administration announces the COLA.

The lower price of gasoline, which dropped amid the coronavirus pandemic, is helping drive down the consumer price index. The Social Security Administration bases COLAs on the consumer price index.

The Senior Citizen League's latest study Social Security Loss of Buying Power said it found SSA benefits had lost 30 percent of their buying power since 2000. "This represents a 3-percentage point improvement in Social Security buying power from our 2019 study, which found a loss of 33 percent since 2000. While lower prices can be good news in the short term, the deflationary trend suggests no COLA in 2021," the group said.

With the small percentage increase in buying power, prices of some common consumer goods and services would have been lower for retirees. "On the other hand, when there are lower prices—this is a signal of deflation—which means a lower cost-of-living adjustment is on the way," Johnson said.

"Inadequate COLAs produce long-term impacts for lifetime Social Security income, retiree savings, debt levels, and even good health," the latest study said. "Due to the loss of the compounding effect of COLAs, the amount of lifetime Social Security income can be substantially less than what retirees may have been counting on, especially in later years."

Household medical expenses consume a substantial part of monthly expenses, according to participants in The Senior Citizens League's surveys. "More than 39 percent of respondents to a recent survey say that they spend more than $750 per month on all Medicare and other healthcare costs," the group said.

Out-of-pocket prescription drugs, Medicare Part B premiums and homeowner's insurance were the top three growing retiree costs since 2000, The Senior Citizens League said.

The COLA for 2009, 2010 and 2015 was also zero, according to the Social Security Administration. The 2019 COLA was 1.6%, and in 2020 the average benefit is $1,460, the advocacy group said.

Nearly 65 million Americans this year will receive more than $1 trillion in Social Security benefits, the federal agency reports.

Mike Scarcella is a senior editor in Washington on ALM Media's regulatory desk. Contact him at [email protected]. On Twitter: @MikeScarcella.

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