Social Security beneficiaries will soon see a big increase in their 2023 payments thanks to a record-high cost of living adjustment (COLA) — one that increases amounts paid out by 8.7%, starting with January checks.
Yet, at the same time, a new study indicated there’s a lot of “catching up to do” for the many seniors and retirees receiving these supplementary income benefits. The study data suggested the 2022 COLA lagged behind ongoing rates of inflation by nearly 50%, on average.
As Barron’s reported, The Senior Citizens League (TSCL) published a Dec. 13 report that showed the 2022 COLA of 5.9% “fell short of actual inflation every month” from January to December by an average of 46%. This also means that the average check amount of $1,656 was more than $42 short every month, or $508 short for the full year.
This is because the 5.9% COLA increase for 2022 didn’t forecast the record rates of inflation Americans have been experiencing the past year, leaving many Social Security beneficiaries struggling to afford rising costs for monthly necessities.
As the latest Consumer Price Index detailed, the all items index increased by 7.1% for the 12 months ending in November (though this summer, the peak was over 9%). The energy index increased 13.1% and the food index increased 10.6%.
Seniors Facing Financial Crunch in Face of Inflation
Because of this financial gap, Barron’s claimed, “Many retirees have had to dip deeper into their savings than planned, while those without savings have had to turn to food pantries and low-income assistance programs in greater numbers.”
As 401K Specialist Magazine reported, “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.”
And though the upcoming 2023 COLA increases to 8.7% (the biggest spike by the Social Security Administration since the ’80s), the estimated extra $146 a month may still not be enough to help those on fixed incomes afford the current cost of goods. As GOBankingRates previously reported, more than 50% of seniors said the new COLA will not be adequate — based on a Motley Fool survey — and less than 40% said the adjustment is “about right.”
A full 85% of seniors noted that inflation is greatly impacting their budgets, data from the same survey suggested, and almost 75% said they rely on Social Security to pay all of their bills.
For those struggling to make ends meet, there are some options. Government assistance programs such as the Housing Choice Voucher Program and Supportive Housing for the Elderly Program, both initiatives from the U.S. Department of Housing and Urban Development, could help. The Supplemental Nutrition Assistance Program (SNAP) can also be called upon to help seniors afford food every month, for those eligible.
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