(Washington, DC) – More than 62 percent of retirees think that Social Security cost of living adjustments (COLA) need a guaranteed minimum, according to a new survey by The Senior Citizens League (TSCL). In January of this year, the annual COLA raised Social Security benefits by only 1.3 percent, making it one of the lowest ever paid. But since then, “inflation has exploded,” says Mary Johnson, a Social Security policy analyst for The Senior Citizens League.
The survey, which had 1,125 participants, was conducted from mid - January through April 20, 2021, and coincided with one of the stiffest increases in inflation in a decade. Johnson researches the effect of rising prices on Social Security benefits. Through the end of December 2020, inflation as measured by the CPI-W— the index used to calculate the annual COLA — was just 1.4% for the year. “But as of the end of March 2021, the CPI-W was more than 3 percent higher than this time a year ago,” she says.
“This is a inflation pattern I haven’t seen before,” Johnson says. Inflation had completely flat - lined in first quarter of last year, which included January and February, well before COVID-19 shuttered businesses and sent the economy into a sudden tail spin in mid-March. But by the end of first quarter 2021, inflation erupted, growing by 1.4 percent versus zero over first quarter 2020. The last time inflation was growing that fast was nine years ago in 2012, but that year was also proceeded by another year of higher inflation, instead of the deflation in 2020.
“When the prices on the goods and services that retirees depend on go through the roof, their Social Security benefits don’t buy as much, and that causes enormous financial stress for all retirees." Johnson compiled a baker’s dozen list of the items whose costs are among the fastest growing. “Newly immunized grandparents will need to budget about 31.2 percent more for car rentals when visiting the grand kids,” Johnson says. “And I’m putting off replacing a failing washing machine. I don’t want to pay 24.2% more to get a new one now.”
Johnson also points out that the fastest growing cost list DOES NOT include the more usual “suspects” — prescription drugs and medical costs. “This is not because those costs didn’t increase,” Johnson says. “They just didn’t increase as much as the other items that made the list,” she says. Physician services were up 5.3 percent, but prescription drugs as measured by the CPI-W were down 2.3 percent from March 2020. Housing costs grew slightly faster than the COLA, up by 2 percent.
Fastest Growing Retiree Costs From March 2020 to March 2021
|Car and truck rental||31.2%|
|Home heating oil||20.2%|
|Pork roasts, chops||10.5%|
|Used cars and trucks||9.4%|
|Toilet paper, paper towels||7.9%|
|Care of invalids and elderly in home||5.9%|
Source: Consumer Price Index data, Bureau of Labor Statistics, March 2021
Compiled by The Senior Citizens League
The Senior Citizens League is working with Members of Congress to have legislation introduced that would strengthen Social Security benefits by tying the annual COLA to the Consumer Price Index for the Elderly (CPI-E), and by providing a guaranteed minimum COLA of no less than 3 percent.
With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors’ groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.