American Seniors Have Lost 40% of Buying Power in 7 Years, Study Says

Seniors have seen their buying power decrease by 40% since 2000, with increases in Social Security benefits trailing far below their actual cost of living. This is according to a study being released by The Senior Citizens League, a nonpartisan seniors group. The study examined the rise in costs of key items and compared it to the annual Social Security Cost of Living Adjustment (COLA).

The Social Security Cost of Living Adjustment (COLA) has increased average benefits by 22% since 2000, while the study found that typical senior expenses have increased by 71%. This amounts to their expenses rising more than 3 times as fast as their income. Of the 48 million U.S. senior citizens who recieve Social Security, 1 in 3, or about 16 million, depend on the monthly check as 90% or more of their total income. In general, most Social Security recipeients rely on it for at least 50% of their. Low income seniors have been most affected by the increase in cost of living, as they have few other options to fill in the gaps.

In order to maintain their lifestyle from 2000 on a then average benefit of $816 per month, a senior today would need $1,397. However, today's average benefit is only $999.80. The aproximate $400 difference in actual cost of living vs. government adjusted rates comes from significant increases in health care, food, and housing.

Medicare Part B premiums rose from an average $45.50 per month in 2000 to $93.50 in 2007 - an increase of over 105%. The cost of a gallon of gasoline has increased 130%, while heating oil increased by almost 113%. The costs of the most basic foods increased almost twice as fast as the year COLA - by 46.6% for 10 lbs. of potatoes and by 38.55% for a pound of butter. Only two of the eight key items chosen to represent an average senior's expenses did not exceed the COLA in their costs.

Daniel O'Connell, Chairman of The Senior Citizens League, said the League knew cost of living was an issue for seniors, but didn't realize just how much it was costing them.

"For years, we've been sounding the alarm bell that America's seniors are falling further and further behind, but even we didn't realize the situation was quite this stark," said O'Connell. "If our annual Social Security increases don't keep up with inflation as they're intended to, how are we supposed to keep up with the rising costs of everything from prescription drugs to home heating to groceries?"

The Senior Citizens League is lobbying for a change in the Consumer Price Index (CPI) used to determine the COLA. Their goal is to offset the effects of the increase in Medicare PArt B premiums to increase seniors' buying power. The CPI currently being used when determining the COLA is the CPI for Urban Wage Earners and Clerical Workers (CPI-W). This index is calculated by tracking the habits of younger workers, people who don't have the large health expenses accompanying old age.

Yet a more accurate reflection of expenses faced by older Americans is already being kept, with the CPI for Elderly Consumers (CPI-E), which has been tracked since 1983. Reformulating the annural increase to tie in wtih the CPI-E would result in a more accurate reflection of elderly American's expenses.

Two bills have been introduced in Congress that would achieve TSCL's goals. One, "The Consumer Price Index for Elderly Consumers," was introduced in the current Congress by Representatives Charles Gonzalez (R-TX) and Robert Wexler (D-FL). A similar bill, H.R. 2032 was introduced by Representative Peter DeFazio (D-OR).

SOURCE:

The Senior Citizens League, Seniors Lose 40% of Buying Power Since 2000, PR Newswire