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With record high inflation, renewing Social Security benefit checks in 2022 just got tougher.

Even after a 5.9% cost-of-living adjustment took effect in January, the record high annual benefit increase is still short, according to new research from The Senior Citizens League.

The average retiree benefit rose to $1,656.30 in 2022 from $1,564 in 2021, an increase of $92.30 a month, according to the nonpartisan senior group. However, a larger increase was needed every month this year to keep up with rising costs due to inflation, the survey found.

The study found that the average retiree benefit was reduced by an average of $42.35 per month, or 46%. This increased to $508.20 during the year.

The Social Security Annual Cost Adjustment, or COLA, is based on the Consumer Price Index for City Wage Earners and Clerks, or CPI-W. The annual change is calculated based on the average of the third quarter index, which is compared to the average index of the third quarter of the previous year.

The 5.9% annual increase in benefits for 2022 was the highest in 40 years when it was announced in October 2021.

Beneficiaries can expect a higher increase of 8.7% in January, surpassing last year’s record.

However, as inflation has outstripped the COLA for 2022, households 65 and older have had a harder time paying for everyday items.

“Even the simplest foods are more difficult…

The fastest-growing cost was home heating oil, which rose 68% from October 2021 to October 2022, according to The Senior Citizens League.

It was followed by the prices of air tickets, which increased by 42.9% during that period. flour and ready mixes, which increased by 24.6%; health insurance, 20.6%; and natural gas – 20%.

Other major categories that saw big price jumps included oil and coolant changes, canned fruits and vegetables, soups, turkey and pet food.

“Even the simplest food is harder for people to afford,” said Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League.

For low-income retirees who have spent their retirement savings, absorbing those higher costs can be especially difficult, he noted.

Medicare Part B also saw a higher increase in 2022, with standard premiums rising 14.5% to $170.10 a month. Those monthly premiums are usually deducted directly from Social Security checks.

As 2023 approaches, Social Security beneficiaries will be poised to see more of a record 8.7% increase take effect as standard Medicare Part B premiums drop 3% to $164.90.

“The good news is that people are realizing 100% of the 8.7% increase,” David Freitag, a financial planning consultant and Social Security expert at MassMutual, told CNBC recently.

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The average retiree benefit will increase by $146 a month to $1,827 in 2023 from $1,681 in 2022, the Social Security Administration said in October. (This is higher than the average January retirement benefit amount that The Senior Citizens League used in its calculations. The average retiree benefit tends to change throughout the year as new beneficiaries start receiving benefits, according to Johnson.)

The agency is currently sending beneficiaries statements that include the exact amount of their raises for next year.

“COLA is going to increase their benefits by a record amount,” Johnson said.

“This is the biggest most pensioners have ever received,” he said.

How far that extra money goes next year will depend on how inflation plays out in the coming months.

If higher prices decline, that could signal a lower cost-of-living adjustment for 2024, Johnson said. The exact measure will be based on CPI-W data for the third quarter of next year.



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