- For Social Security recipients, 2023 saw the largest cost-of-living adjustment in 40 years.
- But if inflation eases, next year’s benefit increase may not be as generous, a new estimate shows.
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The Senior Citizens League also assessed how well Social Security benefits have kept pace with rising costs and found them to be inadequate.
Last year, amid persistently high inflation, eggs were the fastest-growing expense item for seniors, according to the group’s analysis of Bureau of Labor Statistics data through February. Other categories that made the top 5 fastest rising costs include apples, bread, coffee and dental visits.
The Senior Citizens League calculates that Social Security benefits have lost 36% of their purchasing power since 2000.
To be able to live off Social Security benefits as well as beneficiaries did in 2000, today’s retirees would need an extra $516.70 a month, the nonpartisan seniors group found.
The updated analysis of the loss of purchasing power – measured from January 2000 to February 2023 – has improved from a 40% drop in last year’s study. Still, the slightly improved 36% drop in purchasing power is still one of the largest losses on record, according to the group’s analysis.
Eggs have also topped the list of the fastest rising costs for seniors since 2000. Other categories in the top five include prescription drugs, heating oil, dental benefits, and Medicare Part B premiums.
One caveat to a record-breaking cost-of-living adjustment this year is that the extra money — an estimated more than $140 a month — could lead to higher spending among older Americans, according to a Bank of America Institute study.
While higher spending could make it harder to fight higher inflation, it represents delayed relief for older Americans, whose cost-of-living adjustment was less than price growth in 2022.
“It’s extremely difficult for the average retiree to live with these high inflation rates,” David Tinsley, chief economist at the Bank of America Institute, previously told CNBC.com.