Social Security benefits have lost more than one-third of their buying power since 2000, according to a new study released Thursday by The Senior Citizens League, a nonpartisan advocacy group.
"This is the biggest loss of buying power recorded since 2012, and that was the biggest loss that The Senior Citizens League's study has recorded to date," said study author Mary Johnson, a Social Security policy analyst for the organization.
The study's findings represent a significant one-year loss in buying power of 4% from January 2017 to January 2018, boosting the loss since the beginning of the decade from 30% last year to 34% this year.
The loss in buying power occurred even though Social Security recipients received a 2% annual cost-of-living adjustment in Social Security benefits this year. Housing and medical costs — particularly home heating expenses and Medigap premiums — were among the fastest rising costs over the past year.
Based on consumer price index data through May, Ms. Johnson estimates that the COLA for 2019 will be about 3.3% — the highest since 2012. However, that number could change as there are still four months of data to be collected before the Social Security Administration announces the 2019 COLA in October.
In most cases, Medicare Part B premiums, which pay for outpatient services and doctors' fees, are deducted directly from monthly Social Security benefits. In 2018, increased Medicare premiums nearly wiped out the Social Security COLA for most beneficiaries.
More than 1,000 respondents participated in the annual senior survey, which was conducted from January through March. More than half of the respondents — 56% — said their monthly expenses have increased by more than $79 since last year, while their Social Security benefits, after deducting Medicare Part B premiums, increased by less than $5 per month.
"When costs climb more rapidly than benefits, retirees must spend down retirement savings more quickly than expected and those without savings or other retirement income are either going into debt of going without," Ms. Johnson said.
Since 2000, Social Security COLAs increased benefits by 46%, while typical senior expenses have nearly doubled, according to The Senior Citizens League's study. It found that a person receiving the national average Social Security benefit of $816 per month in 2000 would have seen that increase to $1,193 per month by 2018. However, because retirees' costs are rising more quickly than COLAs, that individual would need a Social Security benefit of $1,603 per month in 2018 just to maintain his or her level of buying power in 2000.
A majority of the 60 million seniors and disabled Americans who receive Social Security depend on it for at least half of their total income, and one-third of beneficiaries rely on it for 90% or more of their income.