At the end of 2021, about 70 million U.S. Social Security beneficiaries were given a a 5.9% cost of living adjustment (COLA) increase, the largest adjustment to Social Security benefit payments in the last 40 years. This change stemmed from an annual increase in the Consumer Price Index (CPI).
However, rampant inflation throughout 2022 caused last year’s Social Security benefit increase to fall short, according to research from the Senior Citizens League.
The nonpartisan senior interest group said that inflation caused prices to outpace the payment increase every month in 2022 — despite an average boost of $92.30, which increased the average monthly benefit to $1,656.30.
“From January through December the 5.9% COLA received in 2022 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 said.
Inflation also caused an uptick in the number of seniors living below the poverty line. According to the report, 33% of survey respondents applied for food stamps or visited a food pantry at some point in the past 12 months. That figure was up 10% from 2021.
The Social Security COLA will rise 8.7% in 2023 to an average of $1,827 a month, according to an announcement made in October by the Social Security Administration (SSA). The pending adjustment will mark the highest COLA increase since 1981.
The new COLA adjustment for 2023 will result in an average increase of $140 per month in Social Security benefit payments. However, some seniors who spoke to the Associated Press were pessimistic about the increase making a dent due to inflation.
There are a number of forces driving the issues with inflation, and no nation has been spared. Cost of living increases have been exacerbated by supply chain difficulties and energy prices, which have spiked due to the Russian invasion of Ukraine and the ongoing issues related to the COVID-19 pandemic.
While seniors continue to struggle with these impacts, their collective housing wealth has risen due to home prices largely continuing to increase. Homeowners aged 62 and older saw their collective housing wealth increase by 4.10% in Q2 2022 compared to the previous quarter.
This resulted in an approximately $456 billion increase to a record of $11.58 trillion, according to data provided by the National Reverse Mortgage Lenders Association (NRMLA).