Seniors Losing Nearly $400 Monthly in Social Security Benefits

Seniors may be losing close to $400 each month from their Social Security payments, according to a new report from the Senior Citizens League. This shortfall is raising concerns among beneficiaries who believe that their monthly checks do not accurately reflect the true rate of inflation.

Despite the Social Security Administration (SSA) implementing an annual cost-of-living adjustment (COLA) to address inflation, many recipients feel that these adjustments have not kept pace with the rising cost of living.

Seniors Losing Nearly $400 Monthly in Social Security Benefits

The Senior Citizens League’s report revealed that Social Security payments have failed to match actual inflation rates in about eight of the last 15 years. On average, current Social Security payments are approximately $370 less per month than they should be, leading to a 20% loss in purchasing power for seniors since 2010.

“It’s always challenging to fully assess whether COLA is effectively keeping up with inflation, as various organizations have their own data and estimates on the matter,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

“If this report finds that COLA isn’t keeping up with rising costs, it wouldn’t surprise most seniors who are struggling to make ends meet, even with increased payments.”

The current COLA calculation is based on the Consumer Price Index for Urban Wage Earners (CPI-W), which critics argue does not accurately capture the inflationary pressures faced by seniors, particularly in health care and housing. Seniors often experience these costs at a disproportionate rate.

“The ever-increasing cost of health care has outpaced overall inflation, and that is likely the largest expense for seniors,” Kevin Thompson, a finance expert and CEO of 9i Capital Group, told Newsweek. “Health care costs continue to rise faster than general inflation, and if this trend continues, seniors will see their savings depleted more quickly.”

Many seniors rely on Social Security as their primary source of retirement income, with the average monthly payment currently standing at just $1,778. Thompson noted that the ongoing concerns about COLA not keeping up with inflation highlight the importance of investing in a diversified portfolio.

“Stocks have historically been a good hedge against inflation for investors, and having a portion of your assets in these types of investments can help offset what is lost due to inadequate COLA adjustments,” Thompson said.

As the elderly population continues to grow, particularly with more Baby Boomers entering retirement, Beene warned that the broader economy could face challenges if seniors’ purchasing power continues to erode.

“If seniors can’t keep up with the costs of everyday items, they will likely become more financially conservative and cut back on spending, which won’t be beneficial for the wider market,” Beene said.

Conclusion

The report from the Senior Citizens League underscores the growing concern that Social Security payments are not adequately accounting for inflation, resulting in significant financial strain for seniors. As the population ages and the cost of living continues to rise, addressing these issues will be crucial to ensuring that seniors can maintain their standard of living in retirement.

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