Quick Read – Social Security benefits have lost 13.7% of their buying power since 2016, effectively delivering a stealth cut despite nominal annual increases. – COLAs are tied to the CPI-W, which tracks working-age spending and underweights healthcare costs that hit retirees…
rdest. – Retirees can offset shrinking benefits by drawing on IRAs or 401(k)s, pursuing part-time work, and holding a diversified growth-oriented portfolio. – If you’ve been collecting Social Security for several years, you may have noticed that your monthly benefit has increased thanks to the program’s annual cost-of-living adjustments (COLAs). On paper, those raises look like protection against inflation
In reality, they haven’t always kept pace with the expenses many retirees actually face. Social Security recipients have been steadily losing buying power The whole purpose of COLAs is to help ensure that Social Security benefits can keep up with rising costs. But a recent study by The Senior Citizens League, an advocacy group, found that Social Security benefits have lost 13.7% of their buying power since 2016.
The reason is simple. COLAs have generally failed to keep up with the real-world cost of goods and services that matter most to older Americans because they’re based on an index that measures the spending pattern of working folks, not retirees. Social Security COLAs are based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).