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Social Security Benefits Buy 34% Less Than in 2000

Millions of retired Americans rely on Social Security retirement benefits as a primary source of income; but unfortunately, annual cost-of-living increases have not been enough to offset the higher costs eroding older consumers’ purchasing power. According to an annual study released by the Senior Citizen’s League in June, Social Security retirement benefits have lost 34% of their buying power over the past 18 years.

The study shows that typical retiree expenses have grown by 96.3% since 2000, while Social Security cost-of-living adjustments (COLAs) tied to the consumer price index have only increased benefits by 46% during the same time period. Of the 39 costs analyzed in the study, 26 grew faster than the percentage increase in COLAs from the year 2000 to 2018. Housing and medical outlays top the fastest growing expenses that retirees face. Critics have often stated that the COLA formula fails to capture the different spending patterns for retirees compared with the US population at large. 

You can read the full article, including a table of the fastest growing retiree costs: here. 

Additionally, you can review the full report: here.

In conclusion

Today our social security system provides 40% of an average retiree’s income need. However, trends indicate that it will provide less of the overall retiree’s income in the future. (The study also found a 4% loss in buying power from January 2017 through December 2017.) Because of this change, individuals should continue to be diligent with their savings and long-term retirement planning.

Bob Lagonegro, CFP®

LEGAL INFORMATION & DISCLOSURES

This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. Community First Bank, HFG Trust, and HFG Advisors have no duty or obligation to update the information contained herein. Further, Community First Bank, HFG Trust, and HFG Advisors make no representation, and it should not be assumed that past investment performance is an indication of future results. Moreover, wherever there is potential profit there is possibility of loss. This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services, banking services, or an offer to sell or solicit and securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Community First Bank, HFG Trust, and HFG Advisors believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, included the information contained herein, may not be copied, reproduced, republished, or posted in any form without the prior written consent of Community First Bank and/or HFG Trust and/or HFG Advisors. HFG Advisors, Inc, is a wholly owned subsidiary of HFG Trust, LLC. HFG Trust, LLC is a Washington state-registered Trust company and wholly owned subsidiary of Community First Bank.