(NewsNation) — As the prices of basic needs such as housing and medical care soar, a cost-of-living adjustment to Social Security benefits could temper income pressures for seniors, though some say it may not be enough for the most vulnerable.
The Social Security Administration is expected to announce the cost-of-living adjustment, or COLA, Thursday. The Senior Citizens League estimates it will increase the average retiree benefit of $1,656 by an additional $144.10 a month starting next year.
Living on a fixed income, costs hit harder
“Certainly, people are needing that,” said Mary Johnson, the Senior Citizen League’s Social Security and Medicare policy analyst. “We’ve had lots of emails from people who told us they had cut down to one meal a day, they could not afford to pick up their prescriptions, or they couldn’t afford to get to doctor appointments because of [the] cost of gas … tires for their vehicles.”
Retirees received a COLA increase of 5.9% in 2022. Despite the adjustments, the Senior Citizen League estimates Social Security benefits are falling short by nearly 50%. The average monthly benefit of $1,656 is short about $44 per month, a total of $418 per year to date.
“We don’t know how well it will keep up yet because it’s not received until January and we don’t know the inflation rate yet for 2023, so that’s hard to say,” Johnson said. “However, there’s always the concern it may not keep up with it.”
About one in 15 adults 65 years old and older are economically insecure, according to the National Council on Aging.
Those same seniors are faced with rising housing and health care bills, inadequate nutrition, lack of access to transportation, and job loss, according to the NCOA.
In 2017, nearly half of adults between 55 and 66 years old had no personal retirement savings.
“Without a COLA that adequately keeps pace with inflation, Social Security benefits purchase less over time, and that can create hardships, especially as older Americans live longer lives in retirement,” Johnson said.
Social Security lifts some above poverty level
Social Security benefits help lift 16.1 million older adults above the federal poverty level.
In the most recent NewsNation/Decision Desk HQ poll, 68% of those surveyed age 55 and older said inflation was the No. 1 problem facing the U.S. today.
Since 1975, Social Security’s general benefit increases have been based on increases in the cost of living, as measured by the Consumer Price Index.
The trouble with that calculation, however, is that it doesn’t consider the spending of retired households ages 62 and up, Johnson said. It also gives greater weight to gasoline and transportation costs over things such as health care.
The adjustment would be a welcome relief for many. Despite the high cost of health care, over the past 12 months, food was the fastest-growing expenditure for older adults. Housing and transportation followed, according to the National Council on Aging.
The Senior Citizens League noted that “A COLA (cost-of-living adjustment) of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today.”
“Regardless of all that, the COLA, because it’s so high, is very much anticipated and very much looked forward to,” Johnson said. “Social Security is one of the, if not the only form of retirement income adjusted for inflation.”