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By Aliss Higham
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The buying power of Social Security benefits has declined by 20 percent since 2010 due to "insufficient" Cost of Living Adjustment (COLA) rises, a leading retirement group has said.
The Senior Citizens League (TSCL), a nonpartisan group that works in the interests of senior citizens, has found that 2024's average Social Security payments are worth only about 80 cents on the dollar compared to 2010. In its annual Loss of Buying Power study, the group said the COLA, which is made every year and designed to keep benefit amounts in line with inflation, has fallen lower than inflation over numerous years since 2010.
The yearly COLA is made by comparing the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter—July, August, and September—of the current fiscal year to the average for the same months of previous year. The COLA rise for 2024 was 3.2 percent, 0.2 percent lower than the inflation rate of 3.4.
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"The reality is that COLAs have become less and less likely to match inflation over time," the report reads; in the 1990s and 2000s, 60 percent of annual COLA rises beat inflation. This declined to 40 percent in the 2010s, and throughout the 2020s so far, only one COLA out of five (2023; 8.7 percent) has met inflation.
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The report also notes the high increase in the cost of goods since the turn of the 2010s. From 2010 to 2024, COLA increases raised benefits by 58 percent, averaging 3.9 percent annually. However, the cost of goods and services for typical retirees increased by 73 percent, averaging about 4.9 percent per year during the same period.
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The price of the average iPhone has surged by over 300 percent since 2010, while the cost of the average used car has more than doubled, up by 217 percent.
The cost of everyday goods has increased as well, with the report citing the cost of bread as rising by 146.7 percent, and ground beef increasing 73.1 percent.
Since 2010, the report says the cost of an average home and real-estate taxes in the U.S. have increased by 89 percent.
"It's unlikely that we'll see the sustained growth needed for benefits to recover their buying power without changes to Social Security itself," TSCL chairman Edward Cates said in the report.
"The 8.7 percent COLA in 2022 and the 5.9 percent COLA in 2021 were among the highest we've seen in 40 years—driven by an outburst of inflation during the COVID-19 pandemic—are the exception, not the norm."
TSCL has said that Social Security payments to retired workers would need to rise by $4,440 per year, an additional $370 per month, to rebuild the lost value. Newsweek has contacted the Social Security Administration (SSA) via email for comment.
Other experts have previously pointed out the eroding power of insufficient COLA increases. A report published in May 2024 found that seniors have lost out on more than $1,700 in retirement benefits due to the way COLAs are calculated.
The COLA for 2025 will be announced in October 2024.
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