In 2022, Social Security recipients will receive a 5.9% cost-of-living adjustments to their paychecks, the highest figure in over 40 years. However, as monthly inflation rises, the purchasing power of those benefits increases has dwindled.
According to the data provided for March by the US Bureau of Labor Statistics on Tuesday, the Consumer Price Index for All Urban Consumers, or CPI-U, increased 8.5 percent from a year ago.
Meanwhile, the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which is used by the Social Security Administration to compute the yearly cost adjustment, or COLA, increased by 9.4% in the last year.
According to The Senior Citizens League, a nonpartisan senior organization, the average retirement payout grew to $1,656.30 in 2022 from $1,564, a $92.30 increase each month.
If such payouts kept pace with inflation, the average retirement payout must be $1,711 depending on March data, up to $147 from the average senior payout for 2021.
According to the group’s findings, typical retirement payments have been shorted by $162.60 so far this year.
Food, housing bills, home heating, and drugs are among the top categories where retirees are feeling the pressure. The standard Medicare Part B premium will rise by 14.5 percent to $170.10 per month in 2022.
Inflation Is At An All-time High, Which Could Mean A Stronger COLA In 2023
The Senior Citizens League anticipates that the COLA for 2023 will be 8.9%, based on March figures announced on Tuesday. This is higher than the group’s previous projection of a 7.6% COLA for next year.
Future months’ CPI-W data would, of course, be factored into the official COLA computation for the next year. To decide if there is a COLA increase, the Social Security Administration implies the average of the CPI-W for the third quarter of the present year and contrasts it with the average for the third quarter of the previous year.
Some experts predict that peak inflation may occur sooner rather than later.
The notion that base CPI has dropped and core services only climbed little gives economist Jason Furman, a Harvard University lecturer and former top economic advisor to President Barack Obama, “a glimpse of hope,” he tweeted on Tuesday. “It’s possible that the worst is over,” Furman added.
According to Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League, inflation began to pick up in March 2021, and it may be a turning point this year, with a probable moderation in the subsequent months.
If this happens, the projected Social Security COLA for 2023 will be decreased.
