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Alexandria, VA (June 9, 2008) Seniors have lost 51% of their buying power since 2000, according to a new study by The Senior Citizens League (TSCL), one of the nation's largest nonpartisan seniors groups. While the annual Cost-of-Living Adjustment (COLA) increased the average Social Security benefits by 24%, typical seniors expenses rose almost four times as fast, the study found.
"This study clearly illustrates the dilemma facing seniors living on fixed incomes," says Daniel O'Connell, Chairman of TSCL. The average monthly benefit in 2000 was $816. The annual COLA increased average monthly benefits to $1,013.50 by 2008. The study found, however, that a senior with average benefits in 2000 would require a benefit of $1,531.60 per month in 2008 just to keep up with rising costs.
"Everybody is feeling pain at the gas pump," observes O'Connell. "Seniors with an average Social Security check in 2000 could have purchased 647 gallons of gas with their monthly check. In 2008, their Social Security check would only purchase 284 gallons," O'Connell says. "If gas prices won't get you, the price of eggs will," O'Connell continues. "An average Social Security check in 2000 could buy 877 dozen eggs. Today it buys 460 dozen," he points out. "Medicare Part B premiums which are automatically deducted from most seniors' Social Security benefits have more than doubled since 2000," O'Connell adds.
"These price increases hit seniors on fixed incomes the hardest," O'Connell says. "Low-income seniors who depend on Social Security for the majority of their income are affected the worst."
To help increase the buying power of Social Security benefits and to offset the cost of rising Medicare Part B premiums, TSCL is lobbying for a change in the Consumer Price Index (CPI) used to determine the COLA. The government currently calculates the COLA based on the CPI for Urban Wage Earners (CPI-W). The CPI-W is a more slowly rising index because it tracks the spending habit of younger workers who don't spend as much of their incomes on health care as most seniors do.
The government does track the spending patterns of older Americans, and has done so since 1983, with the Consumer Price Index for Elderly Consumers (CPI-E). TSCL estimates that a senior who retired with average benefits in 2007 would receive about $18,277 more in benefits over a 25-year retirement if the government were to use the CPI-E to calculate the COLA. "The difference between COLAs would be modest at first," explains O'Connell, "but the difference compounds over time like interest. By the end of a 25-year retirement the person who had average benefits in 2008 would have a monthly benefit that's $150 per month higher using the CPI-E, " O'Connell says.
"We urge seniors to contact your Representative and ask him or her to support "The Consumer Price Index for Elderly Consumers Act" (H.R. 1953), introduced by Representative Charles Gonzalez (TX)," O'Connell states. The legislation would provide Social Security beneficiaries with a more fair and adequate COLA by tying the annual increase to the Consumer Price Index for the Elderly (CPI-E).
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