The Social Security Cost Of Living Increase Is Not Keeping Up
Below is a MRR and PLR article in category Home Family -> subcategory Elderly Care.
The Social Security Cost of Living Increase: Falling Short
Is the COLA Losing Its Impact?
Many seniors argue that the annual Social Security cost of living adjustment (COLA) isn't keeping pace with the rising prices of essentials like gas, heating, groceries, and medications. This gap is causing significant hardships for many.
The Growing Disparity
In 2005, the Social Security COLA was just 2.7%. Yet, gas prices surged by 28%, and home energy costs climbed substantially. Meanwhile, the Federal Reserve's increased rates left seniors facing higher costs on credit card bills, car loans, and adjustable-rate mortgages, further eroding their purchasing power.
Real-Life Impacts
The lack of adequate COLA adjustments is hitting seniors hard. Fran, a member of the TREA Senior Citizens League from New Hampshire, reflects the frustrations many feel. She stays informed, noting even slight price increases, such as the rising cost of her favorite oranges.
"I don't think the politicians care about seniors at all," Fran says. "Friends who rely solely on Social Security struggle to make ends meet. Each year, it gets tougher. The politicians don't care about people like them!"
Understanding COLA's Limitations
COLA is tied to changes in the Consumer Price Index (CPI), which includes several variations measuring inflation differently. However, the government uses the Consumer Price Index for Urban Wage Earners and Clerical Workers to calculate COLA. This index focuses on younger workers' spending, whereas seniors dedicate more to healthcare.
Applying this method to seniors, like an 80-year-old veteran based on a 28-year-old mother’s spending, reveals a significant mismatch.
The Impact of Underpayments
The government has tracked senior costs since 1983 through the Consumer Price Index for Elderly Consumers (CPI-E). If this measure had been used, seniors would have seen a 3.1% COLA increase last year instead of 2.7%. While this difference seems minor annually, its long-term effects are profound.
For instance, if Fran retired with a $360 monthly benefit in 1984, she would have received $8,629 more over 21 years using the CPI-E. With compound interest, this could have added tens of thousands of dollars, easing medical expenses, energy costs, and more.
A Call for Change
Over recent months, seniors nationwide have shared their concerns. Medicare may dominate headlines, but COLA is their central focus.
Seniors are demanding action. Frustrated with political stalemates, they recognize the need to present a unified front. By doing so, they hope to exert pressure on legislators to address their needs seriously.
By coming together, seniors can ensure their voices are heard and receive the respect and attention they deserve from their representatives.
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