It's now official: Our Social Security increase for 2020 will be 1.6%, or $23.40 for the average senior who receives benefits. If our Medicare goes up, that comes out of the increase.
We all know the Social Security increases we get are not enough to keep pace with rising prices. The Senior Citizens League did a study a few years ago that determined we had fallen 4% behind actual costs in one year alone. Since 2000 we've lost 34% of our buying power. For example, if we bought $100 in groceries back then, today we'd get only $66 worth.
Just what determines the amount of Social Security increases? The number is called COLA, for cost-of-living adjustment, and the figures are calculated monthly by the Bureau of Labor Statistics using the Consumer Price Index for Urban Wage Earners and Clerical Workers.
The BLS uses the prices in "A Basket of Goods" to calculate what is being spent and determine the Consumer Price Index. It includes food, but also tracks bedroom furniture, toys, the cost of education and communication.
For over a year now I've kept a monthly chart of every dime I spend. If I come home from the store with a receipt or I pay a utility bill, the amount gets noted on the chart.
The CPI that came out in September says that over the past year, overall prices for urban consumers went up 1.7 percent. I know my costs have gone up much more than that.
How about you? Here's some math homework for you for the next year. Make a list of the basic items you buy and the expenses you have. Write down what they cost. A year from now do a comparison and see if they've gone up, and if so, how much.