It’s official: Tens of millions of retirees receiving Social Security benefits will not get a raise next year.
Some costs that are counted heavily in the index, such as gas and transportation expenses, don’t matter as much for retirees who are no longer commuting. Other expenses that are a major part of a retiree’s budget, such as Medicare premiums, aren’t counted at all in the index.
Many retirees have found that their bills — including health-care costs, housing and utilities — have been climbing faster than Social Security benefits.
For example, Social Security benefits grew by 43 percent between 2000 and 2015, according to calculations from the Senior Citizens League. Over that same time period, Medicare Part B premiums have grown by 131 percent. Monthly housing costs rose 44 percent for people who own their home and even faster, 56 percent, for renters. The price of a gallon of heating oil used in boilers rose 159 percent and the price of electricity has increased by 63 percent. The cost of basic land line phone service has grown by 52 percent.
Of course, some of the expenses that have been rising for workers and are counted in the inflation index — such as college tuition and rent — may not cause as large a burden for retirees.
Still, people receiving Social Security benefits have seen their buying power fall by 22 percent since 2000, according to an estimate from the Senior Citizens League. Average Social Security benefits have grown to $1,166.30 a month in 2015 from $816 in 2000, according to the report. But retirees would need a monthly benefit of $1,418 to have the same purchasing power they had when they first retired, the survey found.
That gap exists partly because the cost of living increases that have been offered over that time period have been mostly modest, Johnson said. Last year’s raise, for instance, was just 1.7 percent.