The Senior Citizens League (TSCL) study on the buying power of Social Security benefits reveals that inflation is moderating. A lower inflation rate, however, does not imply that prices have decreased.
Buying Power Of Social Security Benefits May Be Eroded (Photo: orbit brain)
Seniors (Age 85 And Older) Who Retired Before 2000 Have Lost 36% Of Their Buying Power
In particular, seniors (age 85 and older) who retired before 2000 have lost 36% of their buying power, according to this year’s study. To keep the same level of buying power as in 2000, these retirees would need an additional $516.70 each month ($6,200 in 2023). Although many prices on essential commodities will continue to be stubbornly high through February 2023, this study shows that older customers’ prices are just not rising as quickly as they were a year ago.
After the Cost-Of-Living Adjustment (COLA) of 8.7% in 2023, the highest in four decades, the lowering rate of inflation predicts a much lower Cost-Of-Living Adjustment (COLA) for the following year. Mary Johnson, a Social Security and Medicare policy expert for The Senior Citizens League says that the 2024 Cost-Of-Living Adjustment (COLA) may be approximately 3.2%.
When the annual Cost-Of-Living Adjustment (COLA) is inadequate to keep up with rising costs, the buying power of Social Security benefits may be eroded. However, there are some years when inflation moderates and buying power slightly increases. According to a study from a year ago, the buying power of Social Security income has decreased by 40% since the year 2000.
This year the study found that the loss of buying power slightly improved by four percentage points to 36%. However, that is still one of the deepest losses recorded by this study, exceeded only by the loss in 2022.
READ ALSO: Sen. Ron Wyden Introduced The “Protection Of Social Security Benefits Restoration Act” In The Senate
Buying Power Of Social Security Benefits May Be Eroded
The price increases for 38 items and services that seniors commonly use over the same time period are compared to the growth in the Cost-Of-Living Adjustment (COLA) since 2000 in this study. Sharp price rises for food goods, electricity, rental housing, automotive repair and maintenance, and dental care—which rose by 16% this year—had the most effects on buying power.
Without an accurate Cost-Of-Living Adjustment (COLA) that keeps pace with the rising costs, beneficiaries will lose their buying power, especially over the course of a retirement that could last 25 to 30 years. This loss accumulates over time and gets worse as retirees get older. Significant challenges may result from it, such as an unexpectedly rapid depletion of savings, rising debt, and poorer health results. In short, a significant deterioration in an older household’s standard of living.
READ ALSO: Credit Union Marketing: Credit Union Customers Increased In The Second Quarter Of 2023
