The cost of living adjustment (COLA) that was implemented by Social Security for this year is not nearly enough to assist enhance the spending power of seniors.
Since the year 2000, excessive inflation has led Social Security benefits to lose forty percent of their purchasing value, as indicated by data provided by The Senior Citizens League (TSCL).
The cost-of-living adjustment (COLA) rise that was given to retirees in January was the greatest one given in the past four decades, totaling 5.9 percent.
However, despite this increase, elderly citizens are not receiving nearly as much assistance in coping with increased prices as one might expect.
TSCL discovered that the buying power of beneficiaries decreased by ten percentage points throughout the course of the fiscal year that would conclude in March 2022.
In the study, cost-of-living adjustments for Social Security were compared to changes in the prices of 37 different items and services that are regularly utilized by seniors.
According to Mary Johnson, the Social Security policy analyst at TSCL, the most significant impact on benefits was caused by increases in the cost of energy for home heating, gasoline, and increased food prices, as well as a 14.5 percent rise in Medicare Part B premiums in January.
According to Money, the Labor Department reported that consumer prices increased by 8.5 percent for the year that ended in April.
However, the rate of inflation for Social Security payments was even higher: 8.9 percent in April and 9.4 percent in March. According to Johnson’s projections, the COLA for 2023 will be around 8.6 percent.
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According to Money, the value of Social Security payouts has grown by 64 percent from the year 2000. Johnson discovered that the costs incurred by a typical elderly person climbed by a factor of 130% during the same time period.
This indicates that in order for Social Security benefits to remain at the same level of purchasing power as they were in the year 2000, they would need to be $540 more per month than they are right now.
Johnson stated that retirees are fully aware of the fact that the purchasing power of their Social Security income has decreased from the time that they first entered retirement.
To put this into perspective, if seniors spent $100 on products or services in the year 2000, they would only be able to afford $60 worth of the same things now.