Social Security Isn’t Keeping Up
Seniors love COLA. No, not soda… though I assume there are some soda fans out there… but Cost Of Living Adjustments to Social Security. COLAs are the SSA’s response to inflation. From 2000 to 2020, inflation has averaged just north of 2% each year. A dollar in 2000 was worth what $1.51 is worth now. If you do the math, that’s a 51% increase over the past 20 years.
And Social Security has followed suit. The average Social Security monthly benefit in 2000 was $816. Now, 20 years later, it’s $1,246. That follows right in line with the increase in inflation. But even adjusted for inflation, the 2020 monthly benefit is worth less than the 2000 payment was. Why? Buying power. There are some necessary costs that have greatly exceeded inflation, and—guess what—they’re important to seniors.
Property tax and medical costs have shot up 130% in the past two decades. The national average for annual property taxes was $690 in 2000, and is now averaging $1,579… not here, obviously. Medical costs? $6,140 in 2000, $14,151 now! And don’t think Medicare is going to make it all better. Medicare Part B went from $45.50 a month in 2000 to $144.60 this year, a jump of 218%. Medigap coverage by itself went from $119 a month in 2000 to $295.64 in 2020, an upshot of 148%.
The biggest increase, percentage-wise, in the last two decades? Another medical item… Prescription drug costs averaged just over $1,100 in 2000 and now average $3,875, an increase of 252%!
So if you’re hoping for a corrective adjustment in Social Security to account for the droop in spending power… keep hoping. And if you think costs won’t surpass inflation on a regular basis… even a 10 lb. bag of potatoes exceeded inflation in the past 20 years… you’re probably in for a nasty surprise. If any of this gives you pause, we can certainly take a look at what you’re planning for compared to where things are likely headed. Give us a call at 215-657-9200.
Enjoy the weekend. Good luck shopping out there!