Inflation is lowering buying power of vulnerable seniors
Money troubles are increasing for many elderly, who received just a 1.3% Social Security cost-of-living increase this year.
In September, food was 4.6% more expensive than a year earlier, in the biggest year-over-year jump since December 2011, according to government agencies. Costs are climbing for shelter and energy, too.
Because of this year’s high inflation, seniors are in for a 5.9% raise in Social Security in 2021, the largest in 40 years. Retirees will receive an average of $1,657 per month, up from $1,565 this year.
But the increase may be too little too late. Higher prices have been savaging seniors’ bank accounts for a while, the league says, and the small Social Security bump for 2021 has meant just an extra $20 a month for the typical recipient.
Given the dire situation, The Senior Citizens League launched a petition drive and began lobbying Congress for a stimulus check for seniors in September. The petition is already closing in on 75,000 signatures.
Senior budgets are under pressure from all sides
Given today’s steeper prices, seniors — mostly living off modest incomes — have been going without meals and doses of essential medication, according to the league.
There’s another problem. The relatively hefty raise could boost some older people into higher income brackets, making them ineligible next year for food assistance they’re receiving now, says Mary Johnson, the Social Security and Medicare policy analyst for The Senior Citizens League.
Many seniors are now deep in debt, and a benefits boost that merely matches the rate of inflation next year will only maintain the status quo.
Cost-of-living adjustments also do a poor job of keeping pace with health care hikes and federal taxes, notes a recent report from the Center for Retirement Research at Boston College.
“When the taxation of benefits was first introduced in 1983, only 8% of eligible families paid taxes on their benefits. Today, the estimate is that 56% of beneficiary families pay taxes on their benefits,” the researchers say.
For now, The Senior Citizens League argues, a $1,400 check would keep people from skipping meals just to afford necessities like homeowners insurance.
What you can do while waiting on Congress
Even though more people are asking for the $1,400 stimulus check since the petition was launched the first week in September, those calls may go unheeded.
A different petition for a fourth round of stimulus checks has nearly 3 million signatures, but Congress and the White House have yet to budge.
For now, here are some actions you can take on your own to protect your wallet.
Deal with your debt. Credit cards have helped many households get through the last year, but the expensive interest will only make life harder going forward. Folding your balances into a single debt consolidation loan can cut the cost of your debt and help you pay it off faster.
Never overpay while shopping online. How do you know whether you’re getting the best deal when there are thousands of stores online? Save yourself the trouble of comparing prices by downloading a free browser extension that will automatically scour for lower prices and coupons.
Score a better mortgage rate. Interest rates are historically low at the moment; if you refinance, you could save hundreds each month and thousands over the life of your loan
Turn your small change into a diverse portfolio. Even if you don't have much money, you can still earn returns from today’s red-hot stock market. A popular app can help you invest your "spare change" from everyday purchases.