A recent study conducted by the Senior Citizens League suggests that seniors may be losing out on around $400 per month in Social Security benefits. Social Security beneficiaries have long complained that their monthly benefits do not sufficiently account for inflation.
Even though the Social Security Administration offers an annual cost-of-living adjustment (COLA) to account for inflation, many beneficiaries of the program argue that their purchasing power has decreased as a result of insufficient increases.
According to recent study by the Senior Citizens League, Social Security payouts have not adequately represented real inflation in nearly eight of the past fifteen years.
Furthermore, the League claims that the average Social Security income is $370 below what it ought to be. This indicates that seniors’ purchasing power has declined by 20% since 2010 based on their monthly Social Security benefits.
The University of Tennessee at Martin’s Alex Beene, a financial literacy lecturer, notes that the variety of data and estimations available makes it challenging to assess whether the COLA is keeping up with inflation.
The majority of seniors who are having financial difficulties won’t be surprised if this report indicates they aren’t keeping up with rising costs, even with greater payments included in the budget.
The cost of living is rising faster than Social Security benefits
Since this kind of inflation tends to disproportionately affect seniors’ Social Security payments, the Consumer Price Index for Urban Wage Earners, which is used in the current COLA calculation, has long been criticized for failing to adequately reflect the effects of inflation on housing and health care costs.
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The present COLA computation uses the Consumer Price Index (CPI) for urban wage earners, which has long been criticized for failing to sufficiently account for the effects of inflation on housing and health care expenditures.
In addition, Mary Johnson of the Senior Citizens League, a policy analyst for Medicare and Social Security, notes that while the COLA is intended to protect beneficiaries’ purchasing power from growing costs, it is clear that seniors’ actual expenses are outpacing the COLA.
The fact that healthcare costs are a major burden for retirees and have been growing faster than total inflation has mitigated the impact of the COLA. With a COLA boost, however, seniors might still struggle to pay for their medical costs.
To address the growing disparity between Social Security benefits and the actual cost of living, thought and action are also required.
