Millions defenseless in the grip of rising costs

By Will Parry

The nation’s Social Security beneficiaries – more than 58.7 million men, women and children in all – find their standard of living, never luxurious, shrinking year after year because of an outdated and grossly inadequate formula for calculating the annual cost of living adjustment (COLA).

The inadequacy of the formula has been made freshly obvious by its failure to provide any COLA at all either in the current year or in 2011, despite the widespread recognition that living costs continue to rise.

Now a new UCLA study has revealed that “a whole hidden group of adults” over age 65, hitherto not recognized, are in actual need despite their Social Security checks.

Social Security was the primary source of income for 64% of retirees in 2008. One in every three relied on the benefit for at least 90% of their income.

The average Social Security benefit is currently about $1,072 a month, or $12,864 a year. Millions of women, confined to low-wage jobs or out of the labor market entirely as family caregivers, receive substantially less than that amount. Many of those millions are officially living in poverty, as measured by the federal government, with incomes under $10,830 a year.

Now the UCLA study has found that, in California, single persons over age 65, renting a one-bedroom apartment, actually need, not $10,830, but $21,763 -- twice the federal government standard -- to make ends meet.

“There is this whole hidden group of adults in need,” said Susan Smith, program director at the Insight Center for Community Economic Development, which commissioned the research. What’s economic reality in California has validity in Washington State and across the U.S., despite state-to-state variations.

The government’s official poverty measure has been criticized for years because it is based on spending patterns when about a third of a family’s income went toward food.

The official poverty threshold was first calculated in the 1950s, using the cost of a nutrition plan described by the U.S. Department of Agriculture as the bare minimum needed to survive an emergency. It is adjusted annually for inflation, but it doesn’t take into account changing standards of living, regional cost differences, or public benefits and tax credits.

“We don’t spend a third of our income on food,” said Gerald McIntyre, an attorney for the National Senior Citizens Law Center. “If we did, we’d have no place to live.”

Advocates for the elderly emphasize the failure of the standard to take into account out-of-pocket medical costs, which have risen much faster than the overall cost of living.

Advocates, including the Washington Association of Area Agencies on Aging (W4A) and Wider Opportunities for Women (WOW), have been lobbying for the adoption of a measure known as the Elder Economic Security Standard Index. Developed by researchers at the University of Massachusetts Boston’s Gerontology Institute, the index is calculated using the latest government data on food, housing, transportation and medical costs.

Attempts to incorporate the index into state and federal law have run into resistance from those worried about the costs of social services.

Governmental inaction leaves older Americans splitting pills, borrowing money from friends and maxing out their credit cards. And relying on Social Security checks that won’t see a COLA in two full years.