This shortfall can have long-term effects on retirement income needs, retiree savings, debt levels and even health, when older people can't afford prescriptions or necessary medical care.

This, in turn, causes retired households to draw down savings more rapidly than planned, and many carry debt, especially for health-care costs. Lower-income households may go without enough food or health services such as dental care, or postpone filling medically necessary prescriptions.

Between January 2000 and March 2021, Social Security COLAs increased benefits by 55 percent, but the cost of goods and services purchased by typical retirees rose by 102 percent. The cost of propane, food and used vehicles were among the most rapidly rising costs over the past year.

For every $100 a retired household spent in 2000, that household can buy only about $70 worth of the same goods and services today.

• For example, in 2000, the average annual cost of homeowners' insurance was $508 per year. In 2021, however, the average cost is $1,414, an increase of 178 percent over the period.
• In 2000, the average Social Security benefit was $816 per month. A retiree with $816 could pay their entire annual homeowners insurance bill of $508 and still have money left over. By 2021, however, COLAs increased the $816 benefit to just $1,246.

In 2021, more than 61 million Social Security recipients received a 1.3 percent annual COLA, which raised the average retiree benefit of $1,523 by $19.80 per month. However, for many retirees age 65 and up, much or even all their COLA is offset by rising Medicare Part B, supplemental and drug plan premiums, deductibles and out-of-pocket costs.

In a recent survey, 45 percent participants reported that after the deduction for just the Part B premium, their COLA increased their Social Security benefit by less than $15. Eight percent reported no net increase to their benefits.

"A Social Security benefit of $1,645 per month in 2020 would be required just to maintain the same level of buying power as in 2000," Johnson said. "The majority of the 60 million Americans who receive Social Security depend on their benefits for at least 50 percent of their total income, and one-quarter of all beneficiaries rely on it for 90 percent or more of their income."

The Senior Citizens Leagues supports legislation that would strengthen the COLA in three ways:

1. Calculate COLAs based on the Consumer Price Index for the Elderly, which better reflects the spending patterns of retirees.
2. Provide a modest boost in monthly benefits to retirees to make up for years when no COLA or only a negligible COLA was paid.
3. Guarantee a minimum COLA of no less than 3 percent.

READ MORE:

• Social Security benefits in 2021: 5 states with the smallest checks, 5 with the biggest
• 3 Social Security changes coming in 2021
• Social Security COLA fails to keep up with rising costs of essential products and services