(Washington, DC) – Retired and disabled Social Security recipients are anxiously looking forward to the largest cost of living adjustment (COLA) since 1982, according to The Senior Citizens League (TSCL). “This would be the highest COLA that most beneficiaries living today have ever seen,” says Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League. But a high COLA means exceptionally high inflation is impacting consumers. The Senior Citizens League has received more than 200 emails over the past month, with many retired and disabled senders describing the dire situations they face as rapidly rising inflation makes it impossible to pay the bills.
The Social Security Administration announced earlier today that the COLA in 2022 will be 5.9 percent — making it the highest Social Security inflation adjustment in 40 years. Over the past 12 years, COLAs have averaged a meager 1.4 percent. The COLA in 2021 was just 1.3 percent, and raised average benefits by about $20. The 2022 COLA will increase an average monthly retirement benefit of $1,565 to roughly $1,657, an increase of $92.
While the high COLA is welcome, Social Security recipients are saying that years of low COLAs in the past made it next to impossible to cope with the rampant inflation of 2021, because COLAs haven’t kept pace with some of the fastest growing costs of older households. “Over the past 21 years, COLAs have raised Social Security benefits by 55 percent but housing costs rose nearly 118 percent and healthcare costs rose 145 percent over the same period,” says Johnson. These two categories in particular are not adequately accounted for in the COLA.
Johnson says that few people will catch up with the higher COLA alone. “COLAs are intended to protect the buying power of Social Security benefits but, according to consumer price data through July of 2021, Social Security benefits have lost nearly one-third of their buying power, 32 percent, since 2000, about the length of a typical retirement,” she says. “Even worse, it appears that inflation is not done with us yet, and the buying power of Social Security benefits may continue to erode into 2022,” Johnson adds. Inflation is expected to continue well into next year. Johnson compiled a list of the spending categories that are likely to be the biggest challenge for older households in 2022:
- Food: Price increases for many items are starting to slow, but prices will still climb. Normal food costs usually rise in the 1 to 2 percent range annually. But the USDA estimates that, in 2022, food-at-home prices are expected to increase between 1.5 and 2.5 percent, and food-away-from-home prices are expected to increase between 3.0 and 4.0 percent.
- Rental housing: The standard lease for senior rental housing often includes a clause for annual rent increases of about 5 percent. But email received by The Senior Citizens League (TSCL) in recent weeks indicates that a growing number of older and disabled renters fear losing their rental appartments. Rental increases appear to be coming in higher than normal in 2022 (7 percent and higher) in reaction to the expiration of eviction moratoriums that forced normal rent increases to be temporarily put off.
- Owner housing: Rising costs are expected to affect homeowners as well, particularly for people who are planning to move, or renovating an older home. Mortgage rates are expected to rise in 2022 in reaction to higher new home prices, the costs of building and materials, and rising interest rates. Higher prices of homes will also mean higher local real estate taxes and higher homeowners insurance costs.
- Home heating oil and natural gas: With rising demand and shrinking inventories, the cost of heating a home with oil and natural gas this winter are expected to climb this winter by about 21 to 25 percent, according to the U.S. Energy Information Administration.
- Drug prices: The Centers for Medicare and Medicaid Services estimate that prescription drug plan premiums will increase almost 5 percent in 2022, and the Part D out-of-pocket threshold before reaching the catastrophic phase of coverage is growing by 7.6% from $6,550 in 2021 to $7,050 in 2022. Increases of this size in premiums and cost sharing are often an indication that insurers expect higher drug prices in the new year.
To help older and disabled beneficiaries deal with the impacts of inflation, The Senior Citizens League launched an online petition in September advocating for a $1,400 stimulus check for Social Security recipients. The group initiated its outreach to Congressional leaders early in October and continues its lobbying efforts to get an Emergency Stimulus for Social Security recipients.
With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org for more information.
ALSO AVAILABLE TO JOURNALISTS: Social Security Loss of Buying Power report including study methodology available for download.