3 Skyrocketing Costs That Social Security May No Longer Cover

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First, the good news. The Social Security Administration instituted a cost-of-living adjustment (COLA) increase of 3.2% for 2024. That means that the maximum retirement benefit for those who reached full retirement age this year rose to $3,822 per month.

Now for the not-so-great news. In the past 12 months, and even more dramatically since 2020, prices of common or essential products and services have skyrocketed much higher than the COLA adjustments, leaving seniors to either make up the difference or simply go without. 

For instance, “Most food categories have increased between 25% and 30% on average, electricity and other utility prices are up over 30%, transportation prices have risen almost 35%, and energy prices are up a whopping 45%,” said Ben Lies, President and Chief Investment Officer at Delphi Advisers, LLC, specializing in retirement planning.

“For those living on Social Security as a primary source of income, things like energy, utilities, transportation, and food items make up a very large percentage of their total expenditures,” said Lies. Unfortunately, without proper planning, the massive price increases in these categories and others have impacted many seniors’ quality of life, he said.

Here are three areas where the pain has been felt the most in recent times.

Food

If you are living solely on Social Security, you might have to change your eating habits — and definitely stop baking for the grandkids. That’s because while the average of all food has only increased in cost by 2.2% year-over-year, as of February’s report, certain common items have broken well into double digits. Many common foods rose by shocking levels over the span of that year, such as frozen non-carbonated juices and drinks (+27.2%), beef roasts (+9.2%), sugar (+6.1%), and tomatoes (+4.7%).

But the real impact on food prices has taken place since March of 2020. These past four years have had huge, unforeseen impacts on the quality of life for those living on Social Security. With food prices up 25% overall since 2020, here are some foods that you might have to cut out of your diet.

Car Insurance

Seniors living on Social Security might need to embrace public transportation. Even if they already owned a car before, new and used car prices rose following the pandemic, and auto insurance saw one of the biggest increases in the past 12 months as of February. “Car insurance saw a massive increase of 20.6%, much faster than the increase in Social Security benefits,” said Devin Carroll, owner and lead advisor at Carroll Advisory Group, which specializes in retirement planning. Couple that with the fact that car repair rose by 8.5% over the same period, and Junior’s arguments for why Grandpa should relinquish their car keys got a whole lot stronger.

Healthcare

As you might expect, healthcare costs for the elderly take a large portion of their budget. And while Medicare can help, it doesn’t cover everything. The good news here, said Carroll, is that doctors’ fees remained roughly the same. Unfortunately, there were many other areas of healthcare that rose dramatically over the past year. Here are just a few:

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