America’s seniors and retirement community may be feeling additional financial pressure in recent months, as there was a big shortfall in their Social Security payments last year.
According to the nonpartisan Senior Citizens League, there was a sharp rise in the cost of living in 2022 and inflation-adjusted payments to Social Security recipients decreased in the same year. This resulted in a 46% discrepancy in the monthly benefit checks received by 70 million Americans.
The organization said Social Security recipients received a 5.9% cost-of-living adjustment (COLA) last January, which resulted in an average benefit check increase of $92.30, from $1,564 in 2021 to $1,656.30 for 2022.
The league, however, reported that the 5.9% inflation adjustment was lower than the actual inflation figure each month by an average of 46%.
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This calculated discrepancy resulted in an average decrease in the Social Security benefit check of more than $42 per month and more than $508 for 2022, according to their report.
“As Social Security recipients look forward to an 8.7% increase in Social Security benefits in January, inflation in 2022 has strained retiree budgets,” the league said in a statement. “Many retirees were forced to save much faster than expected, and those with no savings turned to food pantries and low-income relief programs in greater numbers.”
The inflation-adjusted rate was calculated using 2021 figures, as measured by the Consumer Price Index.
The annual inflation rate for 2021 was 7%, but the adjustment of social security benefits is calculated only on the basis of the change in the third quarter declaration of the consumer price index for employees and urban office workers (IPC-W).
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The third trimester runs from July 1 to September 1. 30.
In the third quarter of 2021, the CPI-W increased by 5.9%. That rate jumped at the end of the fourth quarter to 7.4%, leaving seniors short even before the start of 2022.
By 2023, these rates have adjusted again.
In January 2023, Social Security benefits increased by 8.7%, or about $140, bringing the average check to almost $1,800.
This increase was again calculated using third quarter inflation rates: inflation was 7.1% in November, down from a shocking 9.8% in June.
Federal agencies predict that 2022 will end with an annual inflation rate of between 7% and 8.01%.
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While seniors look forward to increased Social Security payments in 2023, many are still grappling with the 2022 shortfall between their inflation and their Social Security payments.
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The Senior League reported that 33% of seniors have applied for food stamps or visited a pantry this year, up from 22% last year, and 17% have requested help with heating costs, up from 10% last year, according to a recent study.
The Associated Press contributed to this report.