According to the study, among the top 10 fastest-growing costs on average for older Americans since 2000 are Medicare Part B monthly premiums costs from $45.50 to $144.60, a jump of 218%. Others on the list are homeowners’ insurance, which went from $508 per year to $1,518.97, an increase of 174%; prescription drugs, where annual average out-of-pocket cost went from $1,102 to $3875.76, a 252% jump; and annual real estate tax, which saw a 129% increase from $690 to $1579. Meanwhile, a 10-pound bag of gold potatoes jumped 168%, from $2.98 to $7.98.
Among the fastest growing costs on average for seniors between January 2019 and January 2020 are a gallon gasoline (all grades) from $2.33 to $2.67, a 14.6% jump; a gallon of milk from $2.91 to $3.25, an increase of 11.7%; Medicare Part B premiums from $135.50 to $144.60, a 6.7% jump; Medigap premiums from $279.55 to $295.64, a 5.8% increase; and annual homeowners insurance from $1,327.50 to $1,389.90, an increase of 4.7%.
Johnson said she expects there will be big jumps in some areas of medical expenses. For example, she explained that elective procedures, which were delayed, have been replaced for telehealth or videoconference calls from doctors, and with Congress enacting a 20% boost in Medicare fees with the CARES Act, Medicare spending will be boosted. “So that for seniors is going to be higher,” she said.
This year’s average Social Security benefits saw an increase of 1.6% to $1,460. So, more than 61 million Social Security recipients received an additional $23.40 per month, the study noted. But despite the annual COLA, many retirees still struggle with rising prices, the study said.
In fact, a recent survey conducted by The Senior Citizens League found that for most retirees, the increase was offset by rising Medicare premiums and out-of-pocket costs. Forty-eight percent indicated that after the deduction for just the Part B premium, their COLA increased their Social Security benefit by less than $15. Another six percent of respondents said there was no net increase to their benefits.
According to the study, a majority of the 60 million Americans who receive Social Security depend on their benefits for at least 50% of their total income, and one-quarter of all beneficiaries rely on it for 90% or more of their income.
Johnson said the loss of the compounding effect of COLAs has long-term impacts. “It’s important that retirees maintain the buying power of their benefits over time, and when that buying power doesn’t keep up that means they can buy less over time and that’s what generally happens to retirees quite a bit,” she said.
Additionally, Johnson pointed out that retirement can last 25 to 30 years, and with a third of recipients' benefits being lost they are forced to tap into savings more rapidly than planned, and many are left to carry growing amounts of debt. She added that lower income households may go without enough food, without health services such as dental care, or postpone filling prescriptions.
So, in its effort to help protect the buying power of Social Security benefits, Johnson said The Senior Citizens League, which is 1.2 million strong, is supporting legislation that would strengthen the COLA by basing its calculation on the Consumer Price Index for the Elderly (CPI-E) that better reflects the spending patterns of retirees; provides a modest boost in monthly benefits to make up for years when no COLA or only a negligible COLA was payable; and guarantees a minimum of 3% COLA.