Social Security recpients could receive a big bump in their
benefits next year, but it may not be enough to counter the impact of
inflation.
Inflation continues to climb, pushing consumer prices higher
than forecast in April. The consumer price index, which measure of prices for
goods and services rose 0.3% from the prior month and 8.3% on an annual basis,
which is among the highest in decades, according to the Bureau of Labor
Statistics report on Wednesday.
Based on this latest data, the annual cost of living
adjustment (COLA) for 2023 could be "around 8.6%,” according to estimates
from Mary Johnson, a Social Security policy analyst for The Senior Citizens
League (TSCL). Johnson bases her estimate on data from the Consumer Price Index
for Urban Wage Earners and Clerical Workers (CPI-W) through April.
And while that would be the biggest COLA jump since 1981,
Johnson is more concerned about the immediate impact of inflation on seniors
today. High inflation, she said, has caused Social Security benefits to lose
40% of their buying power since 2000, the deepest loss in buying power since
the beginning of a study she has conducted for TSCL in 2010.
The 2022 COLA was 5.9% and was the highest inflation
adjustment in 40 years for the millions of Americans collecting Social Security
and Supplemental Security Income (SSI). But Johnson had said while the increase
was welcomed, Social Security recipients were still feeling the effects from
rampant inflation because COLAs have not kept pace with some of the fastest
growing costs of older households
In her tracking of Social Security purchasing power since
2010, Johnson said it plummeted by 10 full percentage points, from a 30% loss
of buying power in March of 2021 to 40% in March. That has been the largest
drop in purchasing power since the study, which compares the growth in the
Social Security COLA adjustments with increases in the price of 37 goods and
services typically used by retirees, began. “While prices rose in almost every
spending category, benefits were most impacted by sharp increases in energy
costs for home heating, gasoline, and higher food prices, and a steep 14.5%
increase in Medicare Part B premiums in January of this year,” Johnson wrote.
“Retirees know all too well that Social Security benefits
don’t buy as much today, as when they first retired,” Johnson said. "To
put it in context, for every $100 of goods or services that retirees bought in
2000, today they would only be able to buy $60 worth.”
Johnson’s said her research found that since 2000, COLAs
have increased Social Security benefits by a total of 64%, but seniors continue
to struggle.
Typical senior expenses through March grew by more than
double that rate at 130%, she said, noting that the average Social Security
benefit in 2000 was $816 per month. That benefit grew to $1,336.90 by 2022 due
to COLA increases. She said because retiree costs are rising so much faster
than the COLA, the study found that a Social Security benefit of $1,876.70 per
month in 2020 would have been required ($539.80 more) just to maintain the same
level of buying power as in 2000.
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