Social Security cost-of-living adjustments (COLAs) have failed dramatically to live up to their name. According to The Senior Citizens League, a nonpartisan organization whose mission is to protect Social Security and Medicare benefits, Social Security benefits lost 34% of their buying power between 2000 and 2018.
During those 18 years, COLAs increased the average Social Security benefit 46% from $816 to $1,193, while typical expenditures for retirees (based on 39 essential items) increased 96%, leaving a big gap for seniors to fill.
“When costs more rapidly than benefits, retirees must spend down retirement savings more quickly than expected, and those without savings or other retirement income are either going into debt, or going without,” said Mary Johnson, Social Security and Medicare policy analyst and consult for the league.
Using the league’s calculations, the average monthly Social Security benefit would have had to increase to $1,232 just to maintain the same level of benefits in 2018 as existed in 2000.
For 2019, the league estimates the Social Security COLA, based on CPI data, will be 3.3%, which would be the biggest increase since 2011, when it was 3.6%.
(Related: Social Security COLA Could Top 3% in 2019)
That’s good news for Social Security recipients whose buying power has been eroding steadily. Even this year when the COLA increased benefits 2%, more than any other year since 2011, the average senior was left with less than $5 additional dollars after paying for Medicare Part B.