Average Social Security retirement benefit fell short by 46% in 2022

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In the midst of record high inflation, stretching Social Security checks became more difficult in 2022.

Even as a 5.9% cost-of-living adjustment went into effect in January, the record-high annual increase in benefits still lagged behind, according to new research from The Senior Citizens League.

Average retirement benefits rose from $1,564 in 2021 to $1,656.30 in 2022 — a $92.30 monthly boost, according to the nonpartisan senior group. Still, larger increases were needed each month this year to keep up with rising costs due to inflation, the study found.

Average retirement benefits fell short by an average of $42.35 per month, or 46%, the study found. During the year that amounted to $508.20.

The Social Security annual cost of living adjustment, or COLA, is based on the consumer price index for urban wage earners and white-collar workers, or CPI-W. The year-over-year change is calculated from the average of the index for the third quarter, which is compared to the average for the third quarter of the previous year.

The 5.9% annual increase for 2022 was the largest benefit increase in 40 years when it was announced in October 2021.

In January, beneficiaries can expect an even higher increase – 8.7% – to surpass last year’s record.

But as inflation surpassed COLA for 2022, households age 65 and older found it harder to afford everyday items.

‘Even the simplest foods are harder to afford’

The fastest-growing expense was home heating oil, which rose 68% between October 2021 and October 2022, according to The Senior Citizens League.

That was followed by airfares, which were up 42.9% in that time frame; flour and ready-to-use mixes, which increased by 24.6%; health insurance, 20.6%; and natural gas, 20%.

Other major categories that saw large price increases included oil changes and coolant, canned fruits and vegetables, soups, turkey and pet foods.

“Even the simplest foods are harder for people to afford,” said Mary Johnson, social security and medicare policy analyst with The Senior Citizens League.

For low-income retirees who have spent their retirement savings, it can be especially difficult to absorb those higher costs, she noted.

Medicare Part B also saw higher increases in 2022, with standard premiums rising 14.5% to $170.10 per month. Those monthly premiums are usually deducted directly from Social Security checks.

As 2023 approaches, Social Security beneficiaries will be poised to see more of the record 8.7% increase that takes effect as standard Medicare Part B premiums fall 3% to $164.90.

“The good news…is that people are realizing 100% of the 8.7% increase,” David Freitag, a financial planning consultant and social security expert at MassMutual, recently told CNBC.

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Average retirement benefits will increase by $146 per month to $1,827 in 2023 from $1,681 in 2022, according to the Social Security Administration.

The agency is currently sending statements to beneficiaries with the exact amounts of their increases for next year.

“The COLA is really going to increase their benefits by a record amount,” Johnson said.

“This is the largest most retirees living today have ever received,” she said.

How far that extra money goes next year depends on how inflation fares in the coming months.

If the higher prices fall, that could indicate a lower cost-of-living adjustment for 2024, Johnson said. An exact measurement will be based on CPI-W data for the third quarter of next year.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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