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High Inflation Leads to Biggest Social Security Increase in Decades: NPR

By on October 13, 2022 0

Kevin Soyt, Robert Hamilton and Dave Bayer participate in a water aerobics class in the pool at the John Knox Village Continuing Care Retirement Community on October 15, 2021 in Pompano Beach, Florida. The Social Security Administration is about to announce the largest cost-of-living adjustment in decades.

Joe Raedle/Getty Images


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Joe Raedle/Getty Images


Kevin Soyt, Robert Hamilton and Dave Bayer participate in a water aerobics class in the pool at the John Knox Village Continuing Care Retirement Community on October 15, 2021 in Pompano Beach, Florida. The Social Security Administration is about to announce the largest cost-of-living adjustment in decades.

Joe Raedle/Getty Images

Tulsa retiree Lynn Christophersen depends almost entirely on Social Security to pay her bills, whether it is to cover the increase in the price of gasoline or another increase in the cost of electricity.

“I stopped using my dryer today,” she said. “I started hanging my clothes again in my apartment. And I heard rumors that it was going to start again, and it was like, ‘Damn it!'”

On Tuesday, the Department of Energy warned that electric heating bills will likely be 10% higher this winter than last year. For families that heat with natural gas, the increase could be 28%.

Rent for a two-bedroom apartment in a Tulsa seniors’ community eats up much of Christophersen’s monthly income. She fears that she will have to reduce her workforce soon.

“I just got my rent increase notice on Tuesday,” she said, noting that her lease expires in December. “It’s still $100 a month.”

Fortunately, Social Security benefits will also increase in January. The annual increase is automatic – linked to the inflation of the previous July, August and September. Most years, when prices are stable, this is a trivial adjustment. Now, however, with prices rising rapidly, retirees can look forward to the biggest cost-of-living adjustment, or COLA, in decades.

“Wow!” Christophersen exclaimed when told of the expected increase in her benefits. “It’s huge. It will make a difference.”

More than 65 million people will see the increase in payments, including disabled workers and survivors as well as retirees. The expected jump – between 8 and 9% – is significantly higher than what the typical worker gets.

“People on Social Security are still considered to have a fixed income, but they’re the only group in the country not on a fixed income,” says Bill List, a retiree from Lititz, Pennsylvania. “They at least get a COLA. While a lot of people in the working world, it depends on how the company is doing whether they get a raise or not.

Social Security benefits are still not that generous. The average retiree currently receives about $1625 per month. About 1 in 5 seniors depends on Social Security for at least 90% of their income, so adjusting payments to keep pace with inflation is essential.

“It’s a way we can be sure they can afford their housing costs and their food costs and other important necessities in their lives,” said Kathleen Romig, director of social security and policy. people with disabilities at the Center on Budget and Policy Priorities.

Retirees, who don’t have to commute every day, are generally less sensitive to rising gas prices than other consumers, but they do have to shop for groceries. Miriam Garcia, a Florida retiree, has cut back on her purchases of fresh salmon, even though she says it’s healthy and “better than taking pills”.

“Now I eat canned tuna,” Garcia said with a sad laugh. “Or pasta and gravy. And then a piece of chicken I bought when it’s on sale.”

Garcia’s retirement savings have also been hit by the stock market slump.

“Because of the market we’ve had, it’s been a downward spiral,” she said.

Social Security recipients have lost ground this year as the cost of living increase they achieved in January – 5.9% – did not keep pace with inflation which hit 9% in June.

List hopes its purchasing power will be stronger in the coming year.

“If we get an above-average increase in January this year and inflation at least doesn’t increase further, we should be fine,” he said.

Many people are hoping to see inflation subside soon. While the prices of some things, like used cars, have fallen, many prices continue to rise. And Federal Reserve officials have warned that their efforts to rein in inflation with higher interest rates will likely take time to bear fruit.