Expenses for Seniors Are Rising Faster Than Their Social Security Checks
Social Security benefits haven’t kept pace with the soaring cost of prescription drugs and other expenses for seniors, leading to a 30% drop in benefits’ purchasing power since 2000, according to a study to be released next week by The Senior Citizens League, a nonpartisan organization.
Each year, the Social Security Administration adjusts benefits upward for inflation. (If the consumer price index registers a decline or shows very low inflation, such as in 2015, seniors may get no raise at all the following year.) Yet this annual cost-of-living adjustment (COLA) doesn’t cover seniors’ mounting costs.
The average Social Security benefit today is $1,320 per month, while a benefit of $1,518 would be needed to maintain the buying power that beneficiaries had in 2000, according to the report. Put another way: Since 2000, COLAs have boosted benefits by 43%, while typical senior expenses have jumped 86%, the report found.
Medicare Part B premiums and prescription drug costs are the expenses that have climbed the most since 2000, rising 195% and 184%, respectively, according to the report. Homeowners insurance and real estate taxes followed among the fastest growing expenses.
A majority of the 57 million senior and disabled Americans on Social Security depend on it for at least half of their income, according to the report, while one-third rely on it for 90% or more. When benefits don’t keep pace with expenses, people are forced to neglect their nutrition, medications, household and car upkeep and other needs, says Mary Johnson, the report’s author: “These are choices where there’s no good answer.”
The cost-of-living adjustment for 2018 will be announced this fall. Johnson projects that benefits may rise 2.1%, significantly higher than in recent years but still not enough to provide economic security for struggling recipients. There was no cost-of-living adjustment for 2016, and for this year benefits rose just 0.3%.
That is why Sol Mar REI believes seniors should review their finances often for alternative ways to adjust for these rising costs.
Credits: Elizabeth O’Brien at Time.com