Inflation could drive up Social Security payments by a record-high level next year due to inflation, with average payments reaching $1,800, according to an analysis by the Senior Citizens League, a nonpartisan group that focuses on issues related to older U.S. citizens.
“A COLA of 8.7 percent is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today. There were only three other times since the start of automatic adjustments that it was higher (1979–1981),” the brief states.
The Social Security COLA is aimed at retaining the buying power of benefits. Without COLA, Social Security payments will not keep up with inflation, with the result that people will only be able to buy less with the benefits they receive. This would create stressful hardship for older Americans.
COLA increases are permanent and will keep increasing the Social Security income people receive during their retirement period.
The Senior Citizens League expects the Social Security Administration to announce next year’s COLA on Oct. 13, 2022, once the September Consumer Price Index (CPI) data, a measure of inflation, is released.
Enduring Financial HardshipsIn a Sept. 14 brief, Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League, pointed out that Social Security payment receivers have “fallen behind financially” due to inflation.
“The buying power of Social Security benefits has occasionally improved in the past, but that may not be enough when retirees have spent down their savings to stay afloat in years when inflation was going up. The lifeboat is leaking and taking on water, leaving older Americans at risk of financial drowning,” she said.
A survey by the Senior Citizens League conducted in February 2022 among senior citizens found that 50 percent of respondents had spent their emergency savings due to inflation and 14 percent applied for rental assistance.
In addition, 44 percent carried on a consumer credit card debt for over 90 days and 48 percent visited a food pantry or applied for food stamps, which is more than double the 22 percent reported in October 2021.
According to the Senior Citizens League, roughly 14 percent of participants in a survey said that their low-income assistance fell in 2022 due to higher Social Security benefits.