Social Security update: High inflation putting more financial stress on seniors
Misty Severi
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Social Security beneficiaries are having a hard time keeping up with inflation this year despite a higher-than-normal cost-of-living adjustment for 2023, new research said.
Beneficiaries received approximately $140 more in their paychecks this year to help offset high inflation. But as costs continue to rise, Social Security recipients have seen a 36% drop in their buying power since 2000, according to research from the nonpartisan Senior Citizens League.
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In order to live as well on Social Security benefits in 2023 as they did in 2000, retirees would need an extra $516.70 per month, the group found.
“The average retiree has found living with these high rates of inflation extremely difficult,” David Tinsley, a senior economist at the Bank of America Institute, told CNBC in March.
Next year’s increase is expected to be smaller than January’s, with experts predicting the COLA to go up by 3.1% in 2024, compared to 8.7% in 2023. But the estimates are expected to change.
Seniors have reported that eggs topped their list of concerns when it came to an increase in prices, with prescription drugs, heating oil, dental services, and Medicare Part B premiums rounding out their top five. Eggs, apples, white bread, coffee, and dental visits were the fastest-growing costs in 2000.
“One of the biggest challenges for older households is food insecurity,” Mary Johnson, the Senior Citizen League’s Social Security and Medicare policy analyst, told GOBankingRates. “Our most recent survey found that 63% of survey participants report food as their fastest growing cost. This has been the case since 2021, when we were deluged with emails from Social Security recipients saying they were down to only one meal a day.”
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Between January 2000 and February 2023, Social Security COLAs increased benefits by 78%, or an average of 3.4% a year, according to the Senior Citizens League. However, the costs of goods and services purchased by the average retiree rose by 141.4% from 2000 to 2023, for an average of 6.2% a year.
The Social Security COLA is partly determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers, which rose to 4.6% since April 2022. The Social Security Administration compares the third-quarter CPI-W data for the current year to the third quarter of the previous year and sets a cost of living adjustment if there has been an increase.