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Imagine that you get a monthly raise of $92 at the beginning of the year and your average monthly expenses increase by more than $130 for the rest of the year. That’s what most Social Security recipients faced in 2022.
See: Social Security: Regardless of your age, don’t claim benefits until you reach this milestone
Find Out: What’s the Average Social Security Benefit at Age 65?
A 5.9% cost-of-living adjustment (COLA) in 2022 increased the average payment for Social Security recipients to $1,656 per month from $1,564 in 2021, according to a new report from the Senior Citizens League, an impartial advocacy group for seniors. But with inflation at 8% or higher for most of the year, the 2022 COLA was already nearly obsolete when it started.
The Senior Citizens League estimates that for 2022, COLA underperformed actual inflation by an average of 46% per month. The average Social Security payment fell short by $42.35 a month, or more than $508 for the entire year.
Even as inflation eases – falling to 7.1% in November, the first dip below 8% since February – the rate is still well above COLA’s 5.9%.
One result is that an increasing number of American seniors are living in or near poverty. Recent surveys of adults age 65 and older by the Senior Citizens League found that one-third of survey participants reported applying for food stamps or visiting a food pantry in the past 12 months. That is an increase from 22% in 2020. The survey also found that 17% of respondents have applied for assistance for heating costs, up from 10% in 2020.
“If you’re helping or gifting elderly family and friends this holiday season, these items are a great starting point for thoughtful gifts that can make a big difference,” said Mary Johnson, the Senior Citizen League’s Social Security and Health Policy Analyst. statement.
Helping seniors with heating bills will also be important whether they use natural gas, electricity, oil or coal.
“You know things are bad when we hope Santa will leave coal in our stockings,” added Johnson. “If you’re sending warm wishes to family or friends in need, try adding gift cards for home heating oil, natural gas or electricity. A heated electric mattress protector or warm fleece underlays will give you hugs for life.”
Food and heating were not the only costs to increase in 2022. Standard Medicare Part B premiums also rose 14.5% from the prior year to $170.10 per month, though that figure will drop to $164.90 in 2023.
Meanwhile, Social Security recipients will get a big boost in 2023 thanks to an 8.7% COLA — the highest in more than 40 years. The COLA will increase the average payment by $146 per month. With inflation starting to cool and the Federal Reserve determined to keep lowering it through rate hikes, seniors should be much better positioned financially heading into the new year.
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“The good news…is that people are realizing 100% of the 8.7% increase,” David Freitag, financial planning consultant and social security expert at MassMutual, told CNBC.
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