Finance
Social Security benefits have lost 20% of buying power since 2010. The problem could soon get worse
Ramsey Solutions personality Jade Warshaw breaks down how to get the most out of your Social Security check and more on ‘The Bottom Line.’
High inflation is continuing to wreak havoc on older Americans’ finances.
New research published by the Senior Citizens League, a nonpartisan group that focuses on issues relating to older Americans, estimated that Social Security benefits have lost 20% of their buying power since 2010. On average, payments for retired workers would need to rise by $4,440 per year, or $370 per month, to compensate for that lost value.
“The study confirms that prices older consumers are paying have outstripped cost-of-living adjustments (COLAs), leaving many on the edge of financial distress,” the report said.
Between 2010 and 2024, benefits have risen by about 58%, thanks to the annual COLA. Yet the cost of most goods and services purchased by the typical retiree rose 73% during that same time period.
THE ‘MAGIC NUMBER’ TO RETIRE COMFORTABLY HITS NEW ALL-TIME HIGH
A Social Security card sits alongside checks from the U.S. Treasury in Washington, D.C., on Oct. 14, 2021. (Kevin Dietsch/Getty Images / Getty Images)
The problem may soon get worse.
Recipients are on track to receive a 2.63% COLA in 2025, which is below the current 3% pace of inflation. It would mark the lowest annual COLA since 2021. The Social Security Administration will release the final adjustment percentage in mid-October.
In the 1990s and early 2000s, about 60% of the cost-of-living increases beat the inflation rate, while in the 2010s, only 40% did. Through the 2020s so far, just one cost-of-living increase — a record 8.7% bump in 2023 — has done so.
“The reality is that COLAs have become less and less likely to match inflation over time,” the report said.
AMERICANS ARE WORRIED ABOUT OUTLIVING THEIR RETIREMENT SAVINGS
Social Security recipients are on track to receive a 2.63% cost-of-living adjustment in 2025, which is below the current 3% pace of inflation. (iStock / iStock)
Consumers are grappling with a number of financial headwinds, including steep interest rates and ongoing inflation that has made the cost of just about everything from rent to gasoline to groceries more expensive. The burden is disproportionately borne by low-income Americans, whose already stretched paychecks are heavily affected by price fluctuations.
While inflation has fallen considerably from a peak of 9.1% notched during June 2022, it remains above the Federal Reserve’s 2% goal. And when compared with January 2021, before the inflation crisis began, prices are up nearly 20%.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The uncertain economic landscape has many Americans reconsidering whether retirement is a realistic goal.
More than one-quarter of all non-retired investors said they would likely be forced to return to the workforce at some point due to inadequate savings if they were to retire within the next 12 months, and 19% doubt they will ever save up enough money to retire, according to separate survey data from Nationwide.
“Americans believe they will need over $1 million to retire comfortably, a figure that could be discouraging for even the most committed retirement savers,” said Rona Guymon, senior vice president of Nationwide annuity distribution.
Money manager John Davi is positioning for challenges tied to President-elect Donald Trump’s tariff agenda.
Davi said he worries the new administration’s policies could be “very inflationary,” so he thinks it is important to choose investments carefully.
“Small-cap industrials make more sense than large-cap industrials,” the Astoria Portfolio Advisors CEO told CNBC’s “ETF Edge” this week.
Davi, who is also the firm’s chief investment officer, expects the red sweep will help push a pro-growth, pro-domestic policy agenda forward that will benefit small caps.
It appears Wall Street agrees so far. Since the presidential election, the Russell 2000 index, which tracks small-cap stocks, is up around 4% as of Friday’s close.
Davi, whose firm has $1.9 billion in assets under management, also likes staying domestic despite the tariff risks.
“We’re overweight the U.S. I think that’s the right playbook in the next few years until the midterms,” added Davi. “We have two years of where he [Trump] can control a lot of the narrative.”
But Davi plans to stay away from fixed income due to challenges tied to the growing budget deficit.
“Be careful if you own bonds for sure,” said Davi.
Since the election, the benchmark 10-year Treasury yield is up 3% as of Friday’s close.
‘I opt to fly private — no matter what the cost’: The caviar in first class tastes like burnt plastic. What ever happened to airline standards?
Trump’s election win cleared up some market uncertainty — these big questions remain
How remote work can help you travel this holiday season
Are American progressives making themselves sad?
U.S. Beneficial Ownership Information Registry Now Accepting Reports
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
-
Technology6 days agoAI Use Cases: Retail, Finance & Healthcare Solutions
-
Blog Post1 week agoThe Essential Practice of Bank and Credit Card Statement Reconciliation
-
Stock News1 week agoRivian’s losses widen, but investors like hearing of ‘progress’ in next-gen EV
-
Finance1 week agoChina expected to announce highly anticipated fiscal stimulus package
-
Accounting1 day agoHow to Create an Effective Invoice Process for Small Businesses
-
Technology6 days agoThe Rise of Superapps: How AI is Powering the Next Generation of Mobile Apps
-
Economics1 week agoPowell and the Fed won’t be able to avoid talking about Trump forever
-
Economics1 week agoDid sexism propel Donald Trump to power?