Retirees on Social Security have been affected by inflation during the COVID-19 pandemic, but in 2022 it was particularly severe, with adjustments falling short by nearly half, according to a report by The Senior Citizens League.
Based on TSCL analysis, the 2022 Social Security COLA of 5.9% failed to fully cover inflation costs, resulting in an average monthly shortfall of $41.25 or $495 annually, as CNBC reported on December 20, 2022.
This follows a shortfall of $53 in 2020 and $612 in 2021, bringing the total shortfall to $1,054 since 2020. This does not include additional costs from Medicare Part B premiums.
TSCL stated that the 2022 Medicare Part B premiums were $2,041.20 per year, a large increase in the program’s history.
TSCL questioned if Social Security benefits for senior citizens will recover from inflation-related shortfalls. They noted that before answering, the shortfall caused by COLA not matching inflation must be measured.
They also stated that Social Security recipients’ hopes for catching up with inflation will depend on significant price decrease.
The 2023 Social Security COLA is 8.7%. TSCL warned that it’s uncertain if this high COLA will keep pace with inflation. Meanwhile, the standard Medicare Part B premium for 2023 will decrease by $5.20 per month from 2022. This, combined with the Social Security COLA, may help senior citizens financially if inflation remains steady.
The 2023 Social Security COLA increase may not be sufficient for seniors, as it likely won’t increase buying power significantly, as reported by CNBC.
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, which may not take into account everyday costs.