You Are Being Robbed
By: Max K. Erkiletian
Tags: Seniors, Social Security, Medicare, Retirement, Inflation

But you can do something about it

Photo by Maxim Hopman on Unsplash

Every day a silent thief is taking money out of your pocket. This thief is so deft, you cannot see the loss and there is no security system that can protect your money. Law enforcement can not detect this thief and even if they could, they could not make an arrest. This thief’s stealing is perfectly legal.

The culprit I’m referring to is inflation.

Inflation is the increase in the cost of goods and services over time. For example, the cost of bread the year I was born, 1951, was 12 cents. Today, white bread in the United States averages $2.53 a loaf, according to Numbeo, an international cost of living database.

If your income does not increase with inflation, you are losing buying power.

Inflation has been historically low over the last twenty years for the general population. However, for one group it is an increasing problem that goes unaddressed.

That group is the more than 65 million Americans living entirely or in part on social security.

Inflation hits seniors hardest

Even in times of low inflation, seniors have a tough time because the things they spend on most, such as housing, healthcare, and medications, increase more than other expenses. That’s why the U. S. government began tracking inflation for people over 62. The index the Labor Department uses to measure inflation for seniors is the Consumer Price Index for the Elderly (CPI-E).

Though the CPI-E originated in 1987, it went back to 1982 to begin recording data. In the first 25 years that data was kept, the CPI-E rose 126.5 percent, compared to 110 percent for the rest of the population. That is an average of 3.3 percent annually.

According to the Social Security Administration, a 65-year-old man can expect to live another 19 years and a woman the same age can expect to live 21.5 years.

At 3 percent inflation over the next 20 years, it will cost $181 in 2040 to buy the same things you can buy today for $100.

Healthcare costs rising

The Centers for Medicare and Medicaid Services (CMS) reports that healthcare costs for seniors are three times that of younger adults. And, they are going higher.

Medicare Part B premiums, which covers a portion of doctor’s visits and outpatient expenses, rose seven percent in 2020 to $144.60 per month while deductibles also increased seven percent to $198.

Part B premiums could jump another six percent next year to $153.30, according to a report from Medicare Trustees. However, that same forecast, notes that the pandemic may drive those costs higher.

Drug prices are also expected to continue rising. A recent study by the University of Pittsburgh’s Center for Pharmaceutical Policy and Prescribing reports prescription drug prices increased by 9.1 percent per year from 2007 to 2018. Even with discounts, the net price of prescription drugs increased by 4.5 percent per year.

Social Security is not keeping up

Those rising costs would not be a problem if the income of retirees kept up. However, it does not.

Mary Johnson, Social Security policy analyst for The Senior Citizens League (TSCL), found that current (2020) social security checks are about 20 percent lower than they would have been had they kept pace with inflation.

Each October, the Social Security Administration announces the Cost of Living Adjustment (COLA) for social security recipients. The 2021 COLA is 1.3 percent. In 2017, the COLA was only .03 percent, and several years, 2010, 2011, and 2016 there was no COLA.

“Unless Congress acts to boost Social Security benefits and finds a better way to adjust benefits for growing Medicare costs, this problem will continue to occur with greater frequency in the future,” Johnson said in a Senior Citizens League report.

What you can do

President-elect Joe Biden has proposed changes in social security that would boost benefits for some. Also, two lawmakers in the House of Representatives have proposed a minimum guarantee COLA of three percent. (see: Emergency Bill in Crow’s Feet last October.

You can let your elected representatives know that you vote and this issue is important to you. Contact information for your members of Congress can be found at Fixing COLA in my newsletter The Senior Activist.