NEW YORK (MainStreet) —Retirement is typically referred to as our “golden years,” but new research from The Senior Citizens League suggests that seniors are saddled with serious money woes after retirement as Social Security benefits fail to adequately account for the high rate of inflation.
According to TSCL’s research, the official Cost of Living Adjustment has increased benefits just 31% since 2000, while typical senior expenses like medical care have jumped 73%. That imbalance forces many seniors to spend sparingly and they have lost almost one-third of their buying power since 2000.
“For every $100 worth of expenses seniors could afford in 2000, they can afford just $68 today,” Larry Hyland, chairman of TSCL said in a press release.
The average Social Security benefit for seniors in 2000 was $816 per month according to TSCL, a figure that rose to $1,072.30 by 2011. But the TSCL estimates that a senior would require Social Security benefits of $1,414.70 per month now to maintain the same lifestyle as in 2000.
This conclusion is based on an analysis on the increase in costs of 30 key items between 2000 and 2011, using data from the Consumer Price Index and the Bureau of Labor Statistics. Additional figures were obtained from the Insurance Information Institute, the Energy Information Administration and the Agency for Healthcare Research and Quality.
Each category was weighted based on typical expenditure levels to calculate seniors’ overall loss of buying power. The data show that price increases for 22 out of the 30 exceeded the COLA.
Seniors, perhaps not surprisingly, saw a large increase in health care costs, including a 154% rise in monthly Medicare Part B premiums and a 42% rise in what they pay out of pocket for medical expenses. They’ve also experienced a steep increase in the price of gas, housing costs and food items since 2000. A full breakdown of the analysis is available on TSCL’s website.
The analysis was conducted in an attempt to persuade the government to change how it calculates the COLA that is allocated each year, citing that 2011 marks the second consecutive year in which seniors received no COLA. The TSCL said seniors are expected to receive a very small COLA next year.
However, TSCL believes that current benefits would be much higher if federal officials used the Consumer Price Index for Elderly Consumers (CPI-E) to determine COLA allocation instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) , a slow-rising index that tracks the spending habits of younger workers who don’t spend as much of their income on health care.
“For many years, seniors have watched helplessly as the value of their benefits has eroded. Those losses have added up, and millions of seniors – among our most vulnerable citizens – are barely able to scrape by,” Hyland said.
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