collage of blue tops of social security cards (Photo: Shutterstock)

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A Social Security policy analyst for the advocacygroup The Senior Citizens League is estimating the cost-of-livingadjustment for 2021 will be zero based on consumer price index datathrough April and the continued impact of COVID-19 on the economy.

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

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The lower price of gasoline, which dropped amid the coronaviruspandemic, is helping drive down the consumer price index. TheSocial Security Administration bases COLAs onthe consumer price index.

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

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

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

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Household medical expenses consume a substantial part of monthlyexpenses, according to participants in The Senior Citizens League'ssurveys. "More than 39 percent of respondents to a recent surveysay that they spend more than $750 per month on all Medicare andother healthcare costs," the group said.

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

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

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

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

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