Mary Johnson, Editor
After getting a 2.8% cost-of-living adjustment (COLA) this year — the highest since 2012 — the COLA for next year could be closer to 1.6%. Earlier this year, the cost of gasoline and oil dragged down the consumer price index used to calculate the annual COLA — but other goods and services which form a bigger portion of older household spending have increased at several times the rate of overall inflation, a sign that the buying power of this year’s COLA may be eroding. In 2019 the data indicates that Social Security recipients have lost one third of their buying power (33%) since the year 2000.
According to consumer price data through June, here’s a list of some of the fastest growing retiree costs over the past 12 months:
Fastest Growing Costs of Retiree Households From June 2018 to June 2019
|1. Health insurance||13.7%|
|3. Repair of household items||8.8%|
|4. Gardening & lawncare services||8.0%|
|6. Household paper products||5.6%|
|7. Tuna fish||4.6%|
|8. Motor vehicle maintenance and servicing||4.2%|
|9. Veterinary services||4.2%|
|10. Care of invalids and elderly in their homes||4.0%|
|Overall rate of inflation on all items surveyed||1.6%|
Source: CPI for All Urban Consumers June 2019, Bureau of Labor Statistics.
The COLA for 2020 will be announced in October. It is determined on the percentage of difference in the average increase of the consumer price index for Urban Wage Earners and Clerical Workers (CPI-W) in the third quarter (July, August and September) of 2018 and the average increase in the third quarter of 2019. Summer hurricanes, tariffs and other factors could drive prices and the COLA a little higher, but inflation trends are erratic this year.
To help protect the buying power of benefits, The Senior Citizens League supports legislation that would strengthen the COLA in three ways:
- Calculate COLAs based on a consumer price index that better reflects the spending patterns of retirees - the Consumer Price Index for the Elderly (CPI-E).
- Provide a modest boost in monthly benefits to retirees to make up for years when no COLA or only a negligible COLA was payable.
- Guarantee a minimum COLA of no less than 3 percent.
To learn more, visit www.SeniorsLeague.org.