America’s senior citizens and retirement community might be feeling the additional financial strain 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 increase in the cost of living in 2022, and inflation-adjusted payments given to Social Security recipients decreased in that same year. This resulted in a 46% gap in the monthly benefit checks received by 70 million Americans.
The organization reported Social Security recipients received a 5.9% cost-of-living-adjustment (COLA) last January, which saw the average benefit check increase $92.30, from $1,564 in 2021 to $1,656.30 for 2022.
The league reported, however, that the 5.9% inflation adjustment was short of the actual inflation figure every month by 46% on average.
This calculated discrepancy resulted in the average Social Security benefit check falling short by more than $42 per month and more than $508 for 2022, according to their report.
“While Social Security recipients are looking forward to an 8.7% increase in Social Security benefits in January, inflation in 2022 has taken a toll on retiree budgets,” the league said in a statement. “Many retirees have been forced to spend through savings far more quickly than planned and those without savings have turned to food pantries and low-income assistance programs in higher numbers.”
The inflation-adjusted rate was calculated using 2021’s figures, as measured by the Consumer Price Index.
The annual inflation rate for 2021 was 7%, but the adjustment for Social Security benefits is calculated based solely on the change in third-quarter reportings of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The third quarter runs from July 1 through Sept. 30.
In the third quarter of 2021, CPI-W increased by 5.9%. That rate jumped by the end of the fourth quarter to 7.4%, leaving seniors short even before the start of 2022.
Going forward into 2023, these rates have adjusted again.
As of January 2023, Social Security benefits have increased by 8.7% or about $140, increasing the average check to nearly $1,800.
This increase was again calculated through third-quarter inflation rates: Inflation was 7.1% by November, falling from its shockingly high 9.8% in June.
Federal agencies are forecasting that 2022 will end with an annual inflation rate between 7% and 8.01%.
While senior citizens are looking forward to the increase in Social Security payments in 2023, many are still contending with 2022’s shortfall between their inflation and their Social Security payments.
The Senior Citizens League reported that 33% of the senior citizens apply for food stamps or visited a food pantry this year, compared with 22% last year, and that 17% applied for assistance with heating costs, compared with 10% last year, according to a recent study.
The Associated Press contributed to this report.