The amount of money that Social Security pays out is adjusted each year to take into account the rate of inflation. This is known as the cost of living adjustment, or COLA.  The inflation measure used by the Social Security Administration was down 0.6% for the 12 months that ended in September — largely due to a nearly 30% drop in gas prices. The COLA is set every October based on the September inflation report.  In 2015, Social Security benefits rose 1.7%, and they’ve climbed by less than 2% for three years in a row.  But if prices don’t increase, Social Security benefits stay flat. That’s what happened in 2010 and 2011. And it is happening again in 2016.

The problem for seniors is that the way the government measures inflation simply doesn’t reflect how people on Social Security spend.  Seniors don’t benefit as much from lower gas prices as the average American worker because most are no longer driving to and from work. Medical costs have also increased faster than overall inflation, and a greater percentage of seniors’ spending is on health care.  A study by the Senior Citizens League found that Social Security benefits have lost about 22% of their buying power since 2000, despite the benefit increases due to the COLA.