The 8.7% cost-of-living adjustment (COLA) that Social Security beneficiaries are getting in 2023 is mostly great news — except when they buy eggs or apples, visit the dentist, have their cars repaired or pay their electricity bills.
Each of those items has seen prices rise in double digits over the past year even as the overall inflation rate has declined to 4.9%, its lowest point since April 2021. For Social Security recipients, it means that while their higher 2023 payments offset inflation on many items, they still come out behind on several consumer essentials.
Sadly, this is something Social Security beneficiaries have gotten used to over the years. As previously reported by GOBankingRates, seniors who retired before 2000 have lost 36% of their buying power since the turn of the century because of inflation, according to a new study from The Senior Citizens League, a non-partisan seniors advocacy group.
The study found that these seniors would need an extra $516.70 per month ($6,200 in 2023) to maintain the same level of buying power as in 2000. The reason has to do with math — and for Social Security recipients, the math is not good when you compare their annual COLAs to the annual inflation rate.
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 cost of goods and services purchased by typical retirees rose by 141.4% over the same time period, or an average of 6.2% a year.
Things could get even more challenging next year. The Senior Citizen League’s latest estimate is that the 2024 COLA will be only 3.1%, according to Mary Johnson, the organization’s Social Security and Medicare policy analyst.
“One of the biggest challenges for older households is food insecurity,” Johnson told GOBankingRates in an email. “Our most recent survey finds 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.”
In fact, food items make up half of the 10 spending categories that represent the fastest growing costs for older Americans over the last year, according to a Senior Citizens League analysis of U.S. Bureau of Labor Statistics data. In February, the BLS reported a 9.5% increase in consumer food prices compared to February 2022.
Here’s a look at the 10 fastest growing costs for older Americans from February 2022 through February 2023, nine of which saw prices rise higher than the 2023 COLA:
- Eggs, Grade A large (by the dozen): 110% increase
- Apples all varieties (by the pound): 24%
- Bread, white (by the loaf): 18%
- Coffee (by the pound): 17%
- Dental visits, out of pocket, over 65: 16%
- Electricity (by kilowatt hours): 13.30%
- Motor vehicle maintenance and repair: 13%
- Pets and pet products: 11%
- Chicken (by the pound): 10%
- Rental housing: 8%
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