Inflation has eroded 40% of social security purchasing power since 2000
Inflation has eroded 40% of social security purchasing power since 2000

Inflation has eroded 40% of social security purchasing power since 2000

Inflation is rapidly eroding purchasing power Social Security benefits, according to new research published this week.

The Senior Citizens League, a party-political group focusing on issues concerning older Americans, estimated on Wednesday that social security recipients have lost 40% of their purchasing power since 2000.

“This is the deepest loss in purchasing power since the beginning of this survey in 2010,” said Mary Johnson, a senior Citizens League political analyst who conducted the survey.

Although social security benefits have increased by 64% since 2000 thanks to cost-of-living adjustments, typical senior spending by March 2022 has actually more than doubled – 130% – as consumer prices rise. The Ministry of Labor reported that inflation rose by 8.5% in March, the fastest pace since December 1981, and continued to soar close to the highest in April, when prices rose by 8.3%.

To maintain the same purchasing power as it did 22 years ago, social security had to increase by $ 539.80 a month.

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“Retirees know all too well that social security services do not buy as much today as when they first retired,” Johnson said.

The Senior Citizens League has pushed Congress to pass legislation that will index the adjustment to inflation specifically for seniors, such as the consumer price index for the elderly or the CPI-E. This index specifically tracks the consumption of households with persons aged 62 and older.

The annual social security change is calculated on the basis of the consumer price index for urban and office workers, or CPI-W, which has risen 9.4% over the past year.

Based on current economic data, Johnson estimated that the cost-of-living adjustment in 2023 could be as high as 8.6%, marking the steepest annual adjustment since 1981, when recipients saw a bump of 11.2%.

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The Senior Citizens League previously predicted that COLA for 2023 could be 8.9%, but the overall inflation rate has fallen slightly since then.

The Social Security Administration releases the final adjustment rate in October.

The estimated figure may still be subject to change and ultimately depends on whether inflation has actually peaked or will continue to rise. While economists pointed to Wednesday’s figures as evidence that inflation may be declining, they noted that prices rose more than expected and are still close to record highs – suggesting that any fall could be meticulously slow.

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