Cathie Ramey
RedwoodAge.com

It's not that Social Security recipients don't appreciate a raise, it's just that one more dollar a day would leave 5 million of them in poverty, according to a group seeking to change the benchmark for figuring cost-of-living increases.

The Senior Citizens League says the retirement system's Cost of Living Adjustment (COLA) doesn't truly help retirees keep up with inflation. Since 2000, seniors have lost two-fifths of their buying power, according to a study by the group.

COLA is critical to the majority of seniors who depend on Social Security for at least half their total income. A third of seniors depend on the monthly checks for 90 percent or more of their income, said the league, which counts 1.2 million supporters.

The question is rising in importance as 77 million boomers inch their way into retirement. Many boomers lack the pensions that older Americans received, and most have done a poor job saving for retirement while helping to support both their aging parents and adult children.

Even relatively affluent boomers and small business owners expect to work into traditional retirement years to make ends meet. Some are even returning to their old jobs.

"If it's true that a nation's greatness is defined by how well it treats its most vulnerable citizens, then we must do a better job of protecting impoverished seniors," said league spokeswoman Shannon Benton.

To be sure, the government's cost-of-living adjustments are intended to help benefits rise in relations to costs. However, the league says COLA is based on the Consumer Price Index for urban and clerical workers, a much younger group that doesn't spend as much on health or other expenses that make up the majority of seniors' monthly spending.

$30.20 a Month
The Congressional Budget Office estimated last month that program participants will receive a 2.8 percent increase beginning in January 2009, which translates to $30.20 for the average check. Meanwhile, some of the common expenses faced by seniors are rising much more rapidly.

For example, the league said home heating oil and gasoline have more than doubled since 2000, and potatoes and butter have increased by 47 and 39 percent respectively.

Medicare Part B premiums which cover doctor's visits, tests, and outpatient hospital care, jumped more than 93 percent between 2001 and 2008 while COLA rose a mere 19 percent leaving seniors to cover rising healthcare costs on their own, according to the league.

The league proposes basing the COLA on the CPI for elderly consumers, which would result in significantly higher payments.

According to the league, a senior who retired with a benefit of $460 in 1984 would have received almost $11,200 more over the past 24 years if the COLA had been tied to the index for elderly expenses.