Social Security Benefits Are Losing Buying Power. Here's Why Lawmakers Aren't Fixing the Problem.
Article Excerpt: "...while Social Security benefits are designed to keep pace with inflation in theory, recent data shows they've been lagging in a serious way. The good news is that lawmakers can do something about it. The bad news is that they don't seem to be in a hurry to take action. ...Social Security benefits have lost a whopping 13.7% of their buying power over the past 10 years. And a flawed COLA formula is largely to blame.
COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. The problem is that this index tracks the spending habits of working-age households rather than retirees.
Older Americans often spend a larger share of their income on healthcare, prescription drugs, and housing -- expenses that have risen faster than inflation in many years. As a result, advocates argue that the current COLA formula doesn't accurately reflect the costs Social Security beneficiaries actually face."
Resource: www.fool.com
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