It’s Official: Social Security Can’t Keep Up With Rising Expenses | Personal-finance | #healthcare | #elderly | #seniors
Between March of 2020 and March of 2021, the cost of gasoline increased 22.2% and home heating oil rose 20.2%. The cost of many common household items climbed, as well. Beef roasts increased 11.2%, citrus fruits increased 9.8%, and toilet paper and paper towels increased 7.9%. And while some healthcare costs, like prescription drugs, thankfully held steady, physician services increased 5.3%.
The problem, of course, is that many seniors are limited to a fixed income because their Social Security benefits are their sole cash source month after month. When the general cost of living outpaces COLAs, it leaves seniors struggling to keep up.
A better way to calculate COLAs
A big reason COLAs have fallen short in recent years boils down to the way they’re calculated. COLAs are determined annually by taking third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When the cost of goods and services rises, benefits increase, as well. When the CPI-W shows no change or a downward change, there’s no COLA (though benefits are never reduced, even if the CPI-W moves downward).
The problem, though, is that the CPI-W doesn’t necessarily measure the expenses that eat into seniors’ income the most, like healthcare. One commonly thrown-around solution by senior advocates is to base COLAs on a different index — the Consumer Price Index for the Elderly (CPI-E), which would measure senior-specific expenses. But since the CPI-W has been used for years, instituting that change could be a hard sell.