Here are the gross rates of increase in some retiree’s main budget line items over the same period:
Homeowner’s insurance – 161 percent
Real estate tax – 127 percent
Heating oil – 159 percent
Natural gas – 133 percent
Medicare Part B premiums – 131 percent
Medigap premiums – 100 percent
TSCL says that Social Security beneficiaries have lost 22 percent of their COLA-adjusted buying power since 2000. The organization supports legislation that would base COLAs on the experimental Consumer Price Index for the Elderly (CPI-E) and provide emergency COLA and Medicare premium relief for seniors in 2016.
Of course, these proposals would defeat the purpose of calculations adjustments previously made in the CPI-W, in part to hold down COLA-related costs to the Social Security system. The U.S. Government can’t afford to pay retirees higher COLAs than they are getting.
However, add TSCL’s study to the growing body of research showing shortcomings in using the CPI to measure inflation, especially for seniors.
What makes the TSCL research different is that it tracks items purchased by most seniors and has no philosophical or political axe to grind. It tells the story of seniors’ true inflation rate and declining Social Security purchasing power, just as it is.
Using it is one of the best ways to emphasize to your clients the need to plan retirements without excessive reliance on Social Security.