How will decreased buying power affect my retirement?
Originally published: June 12, 2023
Updated: August 7, 2026
The buying power of Social Security has dropped 20% since 2010, according to The Senior Citizens League's (TSCL) 2024 Loss of Buying Power study. That means the average retired worker's benefit would need to rise by about $370 a month — roughly $4,443 a year — just to match the buying power it had in 2010.
TSCL also projected the 2024 cost-of-living adjustment (COLA) for Social Security to land at 3.1% or lower, compared with the 8.7% increase in 2023's COLA. The 2024 COLA was ultimately set at 3.2%, followed by 2.5% in 2025 and 2.8% in 2026 (Social Security Administration, 2026 COLA Fact Sheet: ssa.gov/news/en/cola/factsheets/2026.html).
The buying power of Social Security benefits can erode when the annual COLA fails to keep pace with rising costs. Inflation moderated in the years that followed, but a lower rate of inflation did not necessarily mean that prices came down, according to Mary Johnson, an independent Social Security and Medicare policy analyst who spent years covering Social Security and Medicare policy for the Senior Citizens League before retiring from the organization in 2024.
TSCL's 2024 study found that between 2010 and 2024, only about 4 in 10 Social Security COLAs kept pace with inflation — down from 6 in 10 during the 1990s and 2000s. Just one of the five COLAs implemented so far in the 2020s (2023's 8.7%) has beaten inflation for the year.
How the Buying Power Adds Up
The average Social Security benefit for retired workers was $1,176 per month in 2010, according to the Social Security Administration. By 2024 it had grown to $1,860, and as of mid-2026 it stands at $2,084 (The Senior Citizens League, COLA Watch, updated July 2026: seniorsleague.org/cola-watch/). But to give retirees the same buying power they had in 2010, TSCL's study found the 2024 benefit would have needed to be $2,230.46 — a gap of $370.23 a month, or $4,442.80 a year.
At the time of the original study in 2023, prices were not rising as fast as the year before, but many prices on key items remained stubbornly high. Since then, COLAs have landed at 3.2%, 2.5% and 2.8% for 2024 through 2026 — each falling short of what TSCL says is needed to fully restore lost buying power.
TSCL's Loss of Buying Power index compares the growth in Social Security's COLA since 2010 with increases in the price of 36 goods and services typically used by retirees over the same period, weighted to reflect a typical senior's budget. That buying power was hit hardest by fast-rising transportation costs (up 96.6% since 2010), communication costs (up 92.7%, driven largely by smartphones), and housing (up 81.2%) — plus double-digit increases in grocery staples like bread and ground beef.
Topping the list of fastest-growing individual items? A basic new iPhone, which cost $199 in 2010 and $799 in 2024 — a jump of more than 300%. Close behind were used cars (up 217%) and bread (up nearly 147%).
“Without an accurate cost of living adjustment (COLA) that keeps pace with rising costs, beneficiaries lose purchasing power, especially over the course of a retirement that could last 25 to 30 years,” The Senior Citizens League said. “This loss is cumulative and grows deeper as retirees age. It can cause significant hardships, including more rapid depletion of savings than expected, growing debt and worse health outcomes. In short – a significant deterioration in an older household’s standard of living.”
From 2010 to 2024, Social Security COLAs increased benefits by 58%, averaging 3.9% annually. Meanwhile, the cost of goods and services purchased by typical retirees rose by about 73.5%, averaging roughly 4.9% annually over the same period, according to TSCL. For every $100 a retired household spent on groceries in 2010, that household could buy only about $80 worth by 2024.
“For long-retired people, this has a major impact. For people in their 80s, that’s usually the time they’re spending through their savings, maybe needing long-term care, and potentially on tighter budgets,” Johnson said.
But even if you have already entered retirement, there are still things you can do to plan ahead and combat these statistics. The first is to meet with a retirement planning professional, such as Summerlin Benefits Consulting, to explore your options.
One option to consider is a Fixed Index Annuity (FIA). An FIA can protect your nest egg during down markets, and many can even offer a reasonable rate of return during up markets. Some FIA products also offer lifetime income and long-term care benefits that can help with a higher cost of living later in life. Having this retirement “paycheck” from a fixed index annuity might give you the peace of mind you’re looking for, especially during uncertain times.
If you would like to learn more about Fixed Index Annuities, please reach out today to schedule your no-obligation meeting with our financial professionals, Stacy and Keith Summerlin. Our primary objective when meeting with our clients is to keep things simple and easy to understand. We can guide you through your options and help you feel more secure about retirement!
Frequently Asked Questions
Q: How much buying power has Social Security lost over time?
A: Social Security benefits have lost significant purchasing power against inflation-driven senior costs. TSCL's original study measured a 36% loss since 2000; its updated 2010–2024 methodology found benefits lost about 20% of their value over that period (TSCL 2024 Loss of Buying Power Report: seniorsleague.org/assets/TSCL-LOBP-Report-2024.pdf).
Q: Will Social Security's cost-of-living adjustment (COLA) keep pace with inflation?
A: The COLA (cost-of-living adjustment) is Social Security's annual benefit increase, meant to offset inflation. Recent COLAs were 3.2% (2024), 2.5% (2025), and 2.8% (2026) (Social Security Administration, 2026 COLA Fact Sheet: ssa.gov/news/en/cola/factsheets/2026.html), often falling short of the actual costs retirees face.
Q: What is a Fixed Index Annuity, and how can it help protect my retirement savings?
A: A Fixed Index Annuity (FIA) is a retirement product designed to protect savings from market downturns while still offering growth potential when markets rise. Many FIAs also offer lifetime income and long-term care benefits, which can help retirees manage a higher cost of living later in life.
Q: How will decreased buying power affect my retirement?
A: Decreased buying power means your Social Security check buys less as prices rise faster than benefit increases, a strain that compounds the longer you're retired. Meeting with a retirement planning professional can help you explore options, such as a Fixed Index Annuity, to help protect your savings.
