Sean Williams | Source, The Motley Fool
For a majority of our nation’s retirees, Social Security income is imperative to meeting their monthly expenses. More than 3 in 5 current retirees relies on their Social Security benefits to account for at least half of their monthly income, and surveys conducted by Gallup of pre-retirees suggest that nearly 9 out of 10 will need Social Security income in some form to make ends meet in retirement.
But as has been well-documented, this vital program is facing nothing short of an epic issue. The Social Security Board of Trustees is projecting that the Trust’s more than $2.8 trillion in asset reserves could be gone by 2034. If this excess cash disappears, benefit cuts of up to 21% could be instituted across the board in order for the program to stay solvent through 2090.
This seemingly imminent cash shortfall might appear to be seniors’ biggest issue — but it’s not.

Social Security’s COLA is falling flat
According to a recently released study from The Senior Citizens League (TSCL), cost-of-living adjustments (COLA) not keeping up with the actual inflation seniors are facing looks to be a far greater problem. Since 2000, the purchasing power of Social Security benefits has diminished by 30%. In plain English, what $100 in Social Security benefits could buy back in 2000 would only buy $70 worth of goods today.
TSCL’s report found that two-thirds of all seniors interviewed had monthly expenses this year that were $79 (or more) higher than last year. Meanwhile, beneficiaries this year received just a 0.3% COLA, the lowest increase on record. For the average retired worker, we’re talking about a $4 monthly increase! Overall, 26 of the 39 costs examined by TSCL grew at a faster pace than COLA between 2000 and the present.
The 10 fastest-growing costs seniors face
What costs exactly are seniors struggling to cope with? Let’s take a look at the 10 fastest-growing expenses for seniors since 2000 listed by TSCL’s report.

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Medicare Part B (+195%): Medicare Part B monthly premiums have jumped from $45.50 in 2000 to $134 a month today.
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Prescription drug costs (+184%): Annual out-of-pocket expenses for prescription drugs have skyrocketed from $1,102 in 2000 to $3,132 currently.
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Homeowner’s insurance (+154%): The national average annual cost to insure a home has risen from $508 in 2000 to $1,292 today.
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Real estate taxes (+147%): The average annual real estate taxes paid on an owned home have risen from $690 in 2000 to $1,701.50 today.
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Propane gas per gallon (+137%): Propane costs on a per-gallon basis have risen from $1.01 in 2000 to $2.39 today.
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Heating oil per gallon (+130%): Since 2000, the price of heating oil per gallon has increased from $1.15 to $2.63.
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Medigap supplemental insurance (+122%): The average monthly premium for a Medigap plan has jumped from $119 in 2000 to $264.45 as of today.
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Pet/Veterinary services (+113%): Between 2000 and today, annual pet care and veterinary-related service costs clawed higher to $232.32 annually from $109.30.
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Aggregate out-of-pocket medical expenses (+97%): For those aged 65 and up, out-of-pocket medical costs have jumped from $6,140 annually to $12,125.
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Oranges, per pound (+95%): If you need your Vitamin C, then you’ve observed orange prices increase from $0.61 per pound in 2000 to $1.19 per pound today.
You’ll note that a number of these increases were specific to medical care or housing-related expenses. Medicare care and housing are two costs that are considerably underrepresented in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is what determines the annual COLA for Social Security.
Could this be a solution?
However, a solution does present itself. Instead of utilizing the CPI-W to calculate Social Security’s COLA, one idea presented by Democrats in Congress is to utilize the Consumer Price Index for the Elderly, or CPI-E.
