More than 71 million Americans receive Social Security benefits. In order to maintain their purchasing power, the Administration updates payments with an annual Cost of Living Adjustment or COLA.
Since the Cost of Living Adjustment depends on the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers), it may not reflect the needs of seniors. Some experts claim SSA should use a special consumer price index for the elderly.
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Social Security recipients continue losing buying power
A recent report released in July by the Senior Citizens League confirms the feeling many seniors on retirement benefits have. There seems to be a considerable loss of buying power over time.
Apparently, the longer you have been on benefits, the bigger seems to be the loss. A previous report showed that Social Security recipients had lost 36% of their buying power since 2000.
The current report claims that since 2010, Social Security benefits have lost about 20% of buying power. This amount of money is vital when it comes to retirees who have a shoestring budget.
Interesting facts regarding the Social Security loss of buying power
According to the Senior Citizens League, this report found that payments for retirees would need to be increased by $370 per month to make up for the loss of buying power.
In just one year, that would be about $4,440. So, Social Security recipients would need a staggering boost to rebuild the purchasing power they have lost since 2010.
The average monthly Social Security payment for retirees taking part in the study was $1,176 in 2010. It is currently $1,860 said the Senior Citizen League. If these average payments had the buying power for 2010, they should be $2,230.