Record Inflation Continues to Bite Into Social Security Checks

Record Inflation Continues to Bite Into Social Security Checks

Inflation has gotten so high that it has reduced the spending power of Social Security recipients.

In January, Social Security recipients received a 5.9 percent cost-of-living adjustment (COLA) increase in their benefits. This increase, which was pegged to inflation, represented the largest increase since the early 1980s.

Now, projections have the COLA number going even higher in 2023. 

According to Fox Business, given inflation data for March, the COLA increase could be as high as 8.9 percent next year. The COLA is calculated by a formula that uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W.) 

"I have never seen my estimates as high as what I'm seeing right now," Mary Johnson, a Social Security analyst for the Senior Citizens League, said in an interview with Fox Business. “The 8.9% would be the highest since 1981.”

The actual number won’t be announced until October. And it remains possible that inflation could subside by the end of the year, therefore driving down the expected COLA number. 

“Inflation means lower savings and for people who don’t have enough savings, it can mean higher debt,” Johnson said in the Fox Business interview. "And the interest with rising rates, especially on consumer credit card debt, can be very costly for people living on fixed income and hard to manage when they’re in retirement.”

In most years without high inflation, the Social Security COLA is in the low single digits. 

Meanwhile, CNBC reported this week that inflation has gotten so high that it has reduced the spending power of Social Security recipients. 

Last year, the Senior Citizens League launched a petition for a new round of stimulus checks for seniors in order to deal with inflation, although it doesn’t appear that the idea has gained any traction in Congress. There have been no new stimulus checks since the passage of the American Rescue Plan Act in the spring of 2021, with inflation often cited as a reason why. 

The petition called for an “emergency” $1,400 stimulus payment. 

“I (and/or my spouse) want Social Security recipients to receive a $1,400.00 emergency stimulus check to cope during this unprecedented inflationary year,” the petition said. “Social Security benefits are one of the few types of income in retirement adjusted for inflation. But soaring inflation has taken a toll on household finances of retired and disabled Social Security recipients.” 

The petition noted that in 2021, “Social Security benefits increased by just 1.3 percent, raising the average benefit by only about $20 a month. But about 86 percent of Social Security recipients surveyed say their expenses increased by much more than that amount.”

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters.