Finance / Government Watch / Politics / Social Security Planning

Social Security Raise – Too Late for Seniors Affected by Inflation?

Social Security

WASHINGTON, DC, Jan 25 — For the second year in a row the Social Security Administration promised seniors big boosts in their Social Security checks to help them cope with the Biden administration’s inflationary spiral – a 5.9% Cost of Living [COLA] bump in 2022 and a whopping 8.7% increase in 2023.  But an analysis by the independent Senior Citizens League [SCL] shows that last year’s increase missed the mark by 46% a month and this year it’s “too early to say how well the 8.7% COLA will keep pace with inflation in 2023.”

Indeed, inflation hit the country hard last year, particularly among seniors, when it hovered in the 9%-plus high in 2022. It has come down to an uncomfortable 6.3% in the new year, still too high for too many of America’s elderly citizens. And it looks like things are getting worse. Despite the fact that the Consumer Price Index [CPI] came down in December, it was by just one-tenth of one percent. 

But essential food prices have continued to increase. Will Luther, the American Institute for Economic Research’s Sound Money Project, recently told Newsmax that the CPI report is deceiving; food prices are still on the rise. Luther said, “The increase in food prices is unfortunately even higher than it seems by looking at year-on-year growth in the CPI release…I don’t think there’s any reason to think food prices will come back down to a level consistent with average price growth we have seen over the past couple of years. Prices will, unfortunately, remain elevated over the next couple of years.”

The Newsmax report cites American Institute for Economic Research economist Peter C. Earle, who agrees food prices “broadly are still rising.” However, they are rising more slowly than they were a few months ago and that a decline will be particularly gradual “because agriculture and other food-related businesses are still reeling from the pandemic policies.”

In her analysis, Mary Johnson, SCL’s Social Security and Medicare policy specialist, says “inflation appears to be moderating but will Social Security recipients ‘catch up’? Inflation as measured by the same index that’s used to calculate the cost-of-living adjustment was 6.3% through December. That’s lower than the new 8.7% COLA starting this month. Will 2023 be the year that seniors catch up? Before anyone can answer that question, we first need to have a measure of just how far Social Security benefits fell short due to cost-of-living adjustments that didn’t match up to actual inflation.”

In fact, a Motley Fool survey found that 55% of respondents said that the 8.7% cost-of-living adjustment wasn’t enough. In its report on the survey, the Motley Fool noted that “there’s a great deal of disagreement over how important Social Security benefits are to retired Americans.” So they included the question in their survey and 70% of them said they rely on their Social Security payments.

Kaiser Health News [KHN], meanwhile, reports that 54% of older women living alone and 45% of single men are “either poor according to federal poverty standards or with incomes too low to pay for essential expenses.” KHN quotes the Gerontology Institute, which revealed “that nearly 5 million older women living alone, 2 million older men living alone, and more than 2 million older couples had incomes that made them economically insecure…Nationally and in every state, the minimum cost of living for older adults calculated by the Elder Index far exceeds federal poverty thresholds, which are used to calculate official poverty statistics.” And that was before inflation soared to more than 9%.

John Grimaldi served on the first non-partisan communications department in the New York State Assembly and is a founding member of the Board of Directors of Priva Technologies, Inc. He has served for more than thirty years as a Trustee of Daytop Village Foundation, which oversees a worldwide drug rehabilitation network.


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Cynthia
10 days ago

The correct word here is affected, not effected.

Smike
6 days ago
Reply to  Cynthia

I don’t want to believe this is as simple as a grammar correction. I feel you have something to say. Please continue…

the_ancient
10 days ago

Reagan started taxing SS at 50% in 1984. For joint, there was a $32K income exemption. For 38 years, this number has not changed a single $ with inflation.

Clinton started taxing SS at 85% in 1994. For joint, there was an additional $12K income exemption. For 28 years, this number has not changed a single $ with inflation.

Besides inflation eating at spendable income, the Senior tax rate is going up every year.

Jeri
10 days ago

I vote that only people who have actually paid into SS get to reap the benefits. That is my money and I don’t feel like sharing.

Nobody’s Business
10 days ago

I don’t know where they get that 8.7% figure from, the essentials food and gas are up well over that mark. I’m guessing it’s just another lie to keep us from getting OUR money back that we paid into Social Security!

Bubbles
10 days ago

… everything on my 2023 budget was well up, over 8.7%. Not one darned thing on my 2023 budget is less than 8.7%, year over year, from 2022 –

anna hubert
10 days ago

Thanks to Pax Americana our generation lived the life that dreams are made of There has not been anything like it ever before It will be some time before it happens again .

Yep
10 days ago
Reply to  anna hubert

Yeah thanks for destroying the world boomers.
Hope you can clean yourself in the rest home I’m not doing it lol

Rick
10 days ago
Reply to  Yep

What are you worried about? You may not have to clean bedpans, but you’ll have to fight over which dumpster your meals are coming from! And you’re probably not tough enough for that!

johnh
10 days ago
Reply to  anna hubert

What is Pax Americana ??? Not familiar with this term, thanks.

anna hubert
10 days ago
Reply to  johnh

That Golden age of prosperity after WWII that lasted about 50 years I borrowed from Pax Romana only that lasted about 200 years of no fighting and no major wars Time of prosperity It never came back

Texas Resister 64
10 days ago

I was “effected” by God and my birth parents. And, yes, I am affected by these idiots in the admin. I think you need to be careful of these homonym issues. I’ll volunteer to screen your stuff if you’ll give me some hours to work. I’m an inveterate editor.

Gabe Hanzeli
10 days ago

Democrats don’t care about seniors. They only care about their corrupt schemes to fill their pockets.

johnh
10 days ago
Reply to  Gabe Hanzeli

I do not think this is Partisan issue, but inflation is calculated by Feds for the year & then apply COLA increase to SS benefits. Correct me if I am wrong, but it is done in this manner & not controlled by one party in power. And I assume that both parties would like to keep voters satisfied.

David Millikan
10 days ago

8.7% COLA for 2023, Hilarious,since DICTATOR Beijing biden’s INFLATION has INCREASED OVER 500% and CLIMBING since January 21, 2021.
Last year’s COLA raise was a JOKE too.
We have been in the Hole for 2 years straight going on 3.
We didn’t get more money. We got LESS money and we are PAYING MORE and HAVE MORE TAXES.
Just like when Obama was in . Don’t forget that BIG $1.00 COLA raise we got in his last year while Medicare Premiums JUMPED UP by $20.00 including Food and Fuel outrageous prices till
PRESIDENT TRUMP put money back in our pockets and made us
ENERGY INDEPENDENT and #1 in
the WORLD.

johnh
10 days ago
Reply to  David Millikan

From what I read, SS fund is still holding its own but Medicare tax is not covering its expenses. It has been lot of years since Congress raised FICA & Medicare taxes & I would rather see them raise small increments than these benefits go broke. And still wonder why Trump said he would roll the SS fund into the General Fund if reelected in 2020. Putting this fund into Gen Fund would hide the debt that Fed Govt. owes this fund with interest & they would use taxes to make the debt look better. Contact your Congressman & vote no on rolling this into General Fund.

Charles Williams
10 days ago

Social Insecurity COLA’s have never enough to keep up ever increasing cost of living. The current inflation started three years ago with the Wuhan virus shut down of businesses and shipping of goods. The current administration is about as useless as I can ever remember in my 73 yrs. Obama made Jimmy Carter look good FJB has turned Carter into a stellar performer.

PaulE
10 days ago

Not really sure what the purpose of this article is beyond stating the obvious. Obviously the real rate of inflation in both 2021 and 2022 exceeded the SS COLA increases granted in both years, so the net net effect to the average SS recipient was a loss of purchasing power in both years. I think just about everyone already understands that.

Social Security was NEVER designed to be one’s sole source of income in retirement. It was designed to be a supplimental source to other retirement income sources. Anyone living solely on SS in retirement will always be losing ground, when it comes to inflation exceeding whatever COLA is granted year over year. The SS program is only allowed to invest whatever surplus funds it has in ultra-low U.S. Treasuries, which are hardly designed to produce dividend yields above the rate of inflation. That was an intentional component of how the program was originally setup to function, as SS was primarily designed by the FDR administration to provide a steady stream of income to the federal government by means of a locked-in buyer, the American worker, to its Treasury bonds.

If people desire the SS program to be able to function as a full-blown, standalone retirement program on its own, one capable of providing a solid middle income lifestyle all by itself, then the SS program needs a complete top to bottom redesign and it wouldn’t look much like the current system now. Which means it will NEVER be done, as it would be mostly private based and the United States government would lose one of its largest buyers of Treasury bonds via FICA taxes. So the situation remains status quo at best. No one really happy, but the alternative approaches not being politically viable.

The Western Europeans have largely gone the government controlled route by creating huge social welfare economies with predictable results. Economic growth has been stagnant all across Europe for decades. Taxes all across the continent are substantially higher than here in order to fund the beast and most seniors over there are ALL still complaining that whatever benefits they receive are still NOT ENOUGH to offset annual inflation rates that higher than here. So that system has already been proven to be a huge failure on multiple fronts.

Texas Resister 64
10 days ago
Reply to  PaulE

Actually, if our birth rate had remained as it was in the fifties and sixties, the system would have stayed solvent indefinitely, because it relies on Ponzi financing. With ever-increasing workers, there would be enough input to handle the outgo. Also, there was hardly ever much money left over after the pay-as-you-go outputs to buy many gov’t bonds. That’s until the 1970s and later, when Boomers were paying a bunch more in than the earlier generations were collecting. So lots of bonds bought. But then the Congress saw all that money and decided to use it for something other than productive investments. More like buying votes, COLA raises, and the like. Long-term result: insolvency

johnh
10 days ago

The Fed Govt. borrowed from this fund & pays a huge amount of dollars per year just for the interest is the way I understand it.

johnh
10 days ago
Reply to  PaulE

Agree that SS program was never designed to be the only source of income for retirees, but to help out with their living expenses. But Medicare is a different story, as I think it was started by LBJ in the late 60s and doubt that Medicare taxes have ever covered the costs of Medicare.

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