While Social Security recipients are looking forward to a historic 8.7% increase in Social Security benefits starting in January 2023, a new analysis shows the 2022 cost of living adjustment of 5.9% was not nearly sufficient to help beneficiaries keep pace with inflation.
2022’s 5.9% COLA fell short of actual inflation every month by 46% on average and left the average Social Security benefit of $1,656 short by more than $42 per month and more than $508 for the year
The Senior Citizens League
Today The Senior Citizens League is reporting that from January through December, the 5.9% COLA fell short of actual inflation every month by 46% on average and left the average Social Security benefit of $1,656 short by more than $42 per month and more than $508 for the year.
Prices in November were up 7.1% compared to a year ago as measured by the latest Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the index used to calculate the annual COLA, released today by the Bureau of Labor Statistics. On the other hand, Social Security benefits in 2022 were only increased by 5.9%.
The result is that many retirees have been forced to spend through savings far more quickly than planned, TSCL says, and those without savings have turned to food pantries and low-income assistance programs in higher numbers.
Recent surveys of adults aged 65 and up by TSCL found that 33% of survey participants reported applying for food stamps or visiting a food pantry over the past 12 months versus 22% in 2020. The survey also found that 17% have applied for assistance with heating costs compared to 10% in 2020.
Today’s CPI report did show inflation moderated more than expected in November. The Labor Department said Tuesday that the CPI rose 0.1% in November from the previous month (and 7.1% compared to a year ago), but both figures were lower than a forecast by Refinitiv economists who predicted a 0.3% monthly increase and a 7.3% annual increase. November’s 0.1% increase marked the slowest annual inflation rate since December 2021.
Still, TSCL’s Mary Johnson notes prices remain quite high, particularly for essentials like heating oil and natural gas, food, housing, and air fares. Many of the goods and services that have the most stubbornly high prices account for the biggest portion spending in older households, Johnson said. Since 2020, price hikes for virtually everything posed the biggest challenge for older Americans, particularly lower-income senior households who depend on Social Security for most, or even all, of their income.
SEE ALSO:
• Historic 8.7% Social Security COLA Finalized for 2023
• Social Security Benefits Lose 40% of Buying Power Since 2000