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This year’s Social Security cost-of-living adjustment was 1.3%, yet many of the costs seniors face are rising much more quickly.
In 2021, the estimated average monthly benefit increased by $20 per month.
Many expenses have dramatically risen in the past year, according to a new analysis of Consumer Price Index data from the Bureau of Labor Statistics done by The Senior Citizens League, a nonpartisan senior group.
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From March 2020 to March 2021, the fastest-rising cost was car and truck rentals, which went up by 31.2%. That was followed by laundry equipment, which climbed 24.2%; gasoline, 22.2%; and home heating oil, 20.2%.
Some prices, such as prescription drug and medical costs, stayed constant, although physician services climbed by 5.3%.
Admittedly, all consumers are grappling with those rising price tags, not just seniors. The Senior Citizens League selected the list based on which costs affect retirees most.
Because older Americans often live on a fixed budget, which typically includes Social Security benefits, having to absorb those higher costs can hit them harder.
“With inflation rising so fast, what’s going on right now is an erosion in buying power,” said Mary Johnson, Social Security and Medicare policy analyst at the league.
When measured by the index used to calculate Social Security’s annual cost-of-living adjustment — the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W — inflation has risen since last year.
The CPI-W was more than 3% higher as of the end of March than it was a year ago.
Moreover, inflation grew by 1.4% by in the first quarter of 2021, compared with 0% in the first quarter of 2020. The last time inflation rose that fast was in 2012.
The measurements point to what may happen with the Social Security cost-of-living adjustment for 2022, typically revealed by the Social Security Administration in October.
“If we see a continuation, we may see the highest COLA since 2008,” Johnson said.
In 2008, the Social Security Administration announced a 5.8% bump for the following year. An increase that large has not been seen since. The average cost-of-living adjustment since 2010 has been 1.4%.
However, there are still six months before a final calculation will be made. Whether there will be an increase to monthly Social Security checks will ultimately be determined by CPI data through September.
A recent poll conducted by the league found that 62% of retirees support a guaranteed minimum for annual Social Security benefit increases. The survey was conducted in January through April and included 1,125 participants.
The league is lobbying Congress for a guaranteed minimum annual increase, as well as a shift to use the Consumer Price Index for the Elderly, or CPI-E. Some advocates believe that index is a better measure of costs seniors face versus the CPI-W.