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By Lynn O'Shaughnessy, Special for USA TODAY

Long before workers at the San Diego Food Bank began distributing cardboard food cartons from the back of a truck on a recent day, elderly men and women, many needing walkers and metal canes, formed a line in a church parking lot.

The free food amounts to a lifeline for these seniors, who have seen inflation wring much of the value out of their fixed incomes. For these retirees, the prices of essentials — notably, gas and food — have galloped beyond reach. Perhaps most of all, they're straining under the weight of crushing medical costs.

Nearly all Americans have felt the sting of inflation in recent months. But when you're retired and your sole means of support is a fixed amount that arrives each month — from Social Security and, for the lucky ones, a pension — the pain is especially severe.

Until recently, many retirees had assumed they had enough income to retire on. That was before gas and food prices began racing out of control.

Jannie Hicks, 75, who picked up a box of food at the San Diego site, is eating more canned vegetables as the price of fresh produce has soared. She's forsaken frozen dinners as too pricey. With gas a luxury, Hicks limits her driving to the grocery store, church and the food bank. She no longer drives to her friends' homes to visit; she catches up by phone instead.

Out of necessity, Carmen Gonzalez, a 73-year-old retiree, has shrunk her monthly grocery bill from $100 a month to $50 by making tamales and enchiladas with cheese instead of meat.

"We're all in a mess," she laments, clutching a free block of American cheese. "For seniors, everything is going up except the money to pay for things."

DAY 1 OF THE SERIES: Rising prices have many seniors downsizing dreams

Those who work with seniors have seen the problem up close.

"By any measure, people who are retired are bearing the worst brunt of the economic slump," says Jim Dau, a spokesman for AARP. "Because they're living on fixed incomes, they're just getting crushed on food and medicine that they can't do without."

For the three months ending May 31, the annualized inflation rate for food topped 6%, the government reported. For energy, inflation exceeded 28%. (Overall prices during that period rose at a 4.9.% rate.)

In a recent survey, AARP found that 59% of Americans ages 65 or older reported having more trouble paying for food, gas and medicine. That's why a growing number of financially squeezed seniors are heading to places they've seldom gone before: credit-counseling centers.

"Our offices are telling me that they are seeing seniors coming in pushing their walkers, who are filing for bankruptcy," says Gail Cunningham of the National Foundation for Credit Counseling, which oversees a national network of more than 900 credit-counseling agencies.

Consumer Credit Counseling of the Black Hills in Rapid City, S.D., is one such site. Its typical clients have traditionally been young or middle-age adults, but seniors began increasingly appearing last year, says Bonnie Spain, the agency's executive director.

"I've been in credit counseling for 20 years," she says, "and even I am surprised."

Cost-of-living measures

It's true that Social Security checks are indexed to inflation; recipients receive a cost-of-living adjustment each year. The adjustment reflects the consumer price index-W, an index developed for so-called urban wage earners and clerical workers. For 2008, the inflation adjustment was 2.3%.

But some argue that the CPI-W index isn't realistic for retirees, because it fails to take account of the goods and services they depend on disproportionately. An alternative inflation index compiled by the Bureau of Labor Statistics, the CPI-E, reflects items that more directly affect those 62 and older. And the CPI-E tends to rise faster than other inflation gauges. During a 25-year period ending in 2007, it posted an annualized inflation rate of 3.3%, vs. 3% for the CPI-W.

"In general, I would think (CPI-E) is a more appropriate index to use for (indexing) Social Security," says John Rother, AARP's policy director.

Rother says he doubts there will be any such move in Congress, until there's major legislation to address the fiscal health of the Social Security system. As a practical matter, he says, AARP is focused on the rising prices of health care, gas and food, while educating the elderly poor about programs that can provide some aid for heating and property tax bills.

Others, such as Alicia Munnell, director of Boston College's Center for Retirement Research, suggest that the federal inflation gauge isn't short-changing Social Security beneficiaries. If anything, Munnell suggests, many academics have been more worried that the index tends to overestimate inflation.

No one disputes, though, that in one specific way, seniors are losing ground with Social Security: Medicare costs are gobbling up a big chunk of their Social Security checks. According to the Centers for Medicare & Medicaid Services, premiums for Medicare and its newer drug coverage, as well as the money needed for co-pays, deductibles and any other costs related to Medicare, eat up 26% of a typical Social Security check.

What's also jeopardizing struggling seniors is the antiquated way that poverty is measured among graying Americans, says Sheila Zedlewski, director of the Income and Benefits Policy Center at the Urban Institute. The federal methodology, designed four decades ago, assumes that elderly adults need only 92% of the amount younger Americans do for basic needs. In fact, Zedlewski contends, seniors generally need as much money as younger adults.

Using the federal formula, an elderly couple recently could have received no more than $12,533 a year from Social Security and other sources to be considered poor.

For younger Americans, the poverty level was $13,884. In the mid-1990s, the National Academy of Sciences recommended in vain that the poverty formula be changed.

Relying on the academy's methodology, the Urban Institute issued a report in May suggesting that the official poverty rate for those 65 and older — which is 6.5%, or 1.8 million people — should be adjusted upward, to 12.3%, or 3.3 million elderly.

Many of the most vulnerable are women. Four in 10 women who are widowed, divorced or single rely almost totally on Social Security, the Social Security Administration says. Yet, many retirees don't recognize the financial hazards that widows and other women face. A recent survey by the Society of Actuaries found that only 16% of retirees were "very concerned" that their surviving spouse might be unable to maintain the same living standard.

"This question to me is a real wake-up call," says Anna Rappaport, a fellow of the Society of Actuaries. "We know overall women are a lot worse off after the death of their husbands."

Mary Tout, 75, of Goodyear, Ariz., is one of many widows who are struggling. She says she could scrape by on her fixed income of $18,000 if she didn't have to care for her 43-year-old son, who is bipolar. A diabetic, Tout lives in a small apartment furnished with a card table, a donated hide-a-bed and a recliner she found at Goodwill. She doesn't have money to pay for her son's medicine. This spring, he tried to commit suicide by overdosing on a stomach medication after her old car was stolen.

"I get real depressed," Tout says. "I pray a lot that things will straighten out."

One often overlooked financial burden for seniors is their own children. As much as they're struggling personally, Tout and many other retirees are dipping into dwindling reserves — if they have any — to help grown sons, daughters and grandchildren. The AARP survey concluded that more than one in three retirees are helping their children pay bills.

Zella Scales, a 64-year-old retired autoworker in Columbus, Ohio, is one of them. Ten months ago, she took in her 27-year-old granddaughter, who had lost her job, and the woman's two children. The granddaughter is saving for an apartment. But high prices have delayed a move.

Just as inflation is squeezing elderly Americans, the one asset that's traditionally helped soften the impact of rising prices — home equity — has been shrinking as house prices have fallen. When home equity is large enough, homeowners can borrow against it. But lately, falling equity and tighter lending rules have reduced access to loans.

"This is a huge wake-up call for people who had too much expectation that increasing home values was the way to finance retirement," Rappaport says. "The house isn't going up in value, and in many cases today, the mortgage has a higher balance than the value of the house."

Retirees fortunate enough to have nest eggs to supplement a fixed income still face challenges, especially in trying to protect against catastrophic bills. Nursing home expenses are spiraling, as is the cost of long-term care insurance. Dawn Helwig, an actuary at Milliman, a consulting firm, says the cost of premiums for new long-term care policies with inflation coverage has jumped by 30% to 40% since 2001, compared with an overall inflation rate of 23.7% in that time.

A 2008 survey by the Employee Benefit Research Institute indicates that only 52% of retirees in good health and 27% of those in fair to poor health felt confident that they had enough money to pay for long-term care.

Shrinking buying power

Inflation attacks rich and poor. Henry Hebeler, a retired Boeing executive and founder of Analyze Now, a website dedicated to helping retirees, amassed plenty of money to cover his retirement. Yet he's seen the buying power of his pension shrink drastically during a period of modest inflation. Nineteen years after he retired at age 55, Hebeler's fixed Boeing pension is worth just 53% of its original value.

"I see people around who started off pretty affluent; they didn't care much about money when they first retired," Hebeler says. "But after a few years, they're picking food more on price, they've given up memberships to exercise and golf clubs, and they've moved into less expensive homes."

In Florida, some retirees who thought they were set for life are abandoning their lives by the beach. Herb Williams, 68, of St. Augustine, says he knows many retirees who have become "half-backs." That's what Floridians call retirees who don't return to the North but rather retreat halfway or so back, to other states — to South Carolina, say, or to Tennessee — to escape hurricanes, as well as higher prices for real estate, insurance and other necessities.

The friends who are left behind in Florida condos, meanwhile, are turning into homebodies, laments Williams, who sold two gas-guzzlers and replaced them with a Ford Fusion with better gas mileage.

Some social groups, including the Elks Club and Italian Club, to which he belongs, are cutting way back on events. When there are dances, he says, fewer people show up.

"People," Williams says, "are staying home and saving money."