The Social Security Administration announced Oct. 17 that seniors will receive an additional 2.3 percent in their Social Security checks beginning in January 2008, representing the lowest cost-of-living adjustment in four years.
The average monthly Social Security retirement benefit will increase by $24, to $1,079. The adjustment, based on the rise in the consumer price index in the third quarter, directly affects the finances of about 48 million people, including Social Security retirees and 11 million people who receive disability or other supplemental income from the Social Security Administration.
Despite the increase, at least five million people age 65 and older will remain in poverty, according to a recent study by The Senior Citizens League (www.seniorsleague.org), one of the nation’s largest nonpartisan seniors groups. TSCL says this is because costs are rising significantly faster than the annual Social Security Cost of Living Adjustment (COLA).
Between 2001 and 2008, Medicare Part B premiums will have soared by more than 93 percent while the COLA will have increased just 19 percent, leaving many seniors on their own to cover all other rising costs.
Although the COLA is intended to help seniors keep up with inflation, a recent study by TSCL that analyzed eight key expenditures found people 65 and older have lost 40 percent of their buying power since 2000. Expenses such as home heating oil and gasoline have more than doubled since the beginning of the decade, while food staples such as potatoes and butter have increased by 47 and 39 percent, respectively.
A majority of the 48 million Americans 65 and older who receive a Social Security check depend on it for at least 50 percent of their total income, and one in three beneficiaries relies on it for 90 percent or more of their total income.
“An annual increase of 2 percent just isn’t enough to shield seniors from costs that are rising by double digits,” says Shannon Benton, executive director of The Senior Citizens League.
To help offset the cost of Medicare Part B, 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 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 expenditures. However, the government also tracks the spending patterns of older Americans with the CPI for Elderly Consumers, or CPI-E. By tying the annual increase in the COLA to the CPI-E, seniors would see additional relief in their monthly checks.