It probably hasn't escaped your notice that your money just doesn't go very far lately.
Some experts say the purchasing power of Social Security has dropped 40 percent since 2000.
According to The Senior Citizens League (TSCL), for every $100 of goods and services that retirees bought in 2000, today they would only be able to buy $60 worth. The annual cost-of-living adjustment (COLA) has not kept up with inflation. The cost of goods and services has risen by 130 percent, according to TSCL. That is more than twice the rate that benefits have increased.
With the 2023 COLA, the increase announced in October was more than 8 percent, one of the largest increases in Social Security for many years. Along with decreases in the premiums for Medicare Part B, seniors were expected to see at least some increase in their income. Sadly, with inflation still trending up, this still may not be enough
But why doesn't Social Security really keep up with inflation?
Part of the reason is how it is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). You don't have to think too long to realize that this index doesn't reflect senior spending habits and how inflation increases their spending.
These workers don't spend money the same way as seniors, according to The Motley Fool. Seniors, who are usually retired, spend more of their money on housing and medical care than people who are still working. Instead, the CPI-W gives more weight to things like transportation, food, education and clothing.
Both parties in Congress agree that this is a problem, but they haven't agreed on a solution.
