The official rate of inflation just fell in March — but the bad news on rising prices isn’t over for seniors, a new report warns.
Next year’s Social Security cost of living adjustment, or COLA, may fall below 3% if the numbers on prices continue to fall in line with forecasts, the Senior Citizens League now predicts.
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That’s on top of cost of living adjustments over the past two years that have failed to keep up with inflation, the pro-senior think tank reports.
The average Social Security recipient is more than $ 1,000 a year worse off in real, purchasing-power terms as a result of surging inflation, senior analyst Mary Johnson says.
Meanwhile this year’s COLA, nominally 8.7%, has been entirely wiped out by rising costs of Medicare part B premiums, she adds.
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“The 8.7% COLA increase in 2022 exceeded the actual rate of inflation every month so far this year by an average of 2.6%,” Johnson estimates. “That’s about $ 44.90 per month based on an average Social Security benefit of $ 1,694.00. But that so-called cushion is completely consumed by the $ 164.90 a month Medicare Part B premiums which are automatically deducted from Social Security benefits.”
Social Security calculates annual cost of living adjustments every fall, to take effect at the start of the following year. The adjustments are based on a comparison of average consumer prices over the summer with the same prices during the summer a year earlier. But because the adjustments don’t take effect until the following year, during periods of rising inflation senior citizens are left behind the curve.
A new survey of 1,055 senior citizens conducted by the Senior Citizens League found a jump in the numbers of seniors feeling the economic pain. An astonishing 45% told pollsters they were carrying credit card debt for 90 days or more. And the number saying they have depleted a retirement account over the past 12 months rocketed during the fourth quarter from 20% to 26%.