Inflation has accelerated in recent months. This means seniors may get a considerably larger cost-of-living boost in their Social Security benefits in 2022 if consumer prices keep going up at their current rate. Social Security benefits increased by 1.3 percent in January of this year.
According to Mary Johnson, a Social Security analyst for the Senior Citizens League, based on the 0.8 percent increase in the consumer price index in April, Social Security benefits may rise 4.7 percent in 2022. That would be the highest annual cost-of-living increase in Social Security benefits since 2009 when the COLA increased by 5.8%.
However, growing inflation implies that seniors’ purchasing power will continue to decline. Over the last two decades, annual Social Security benefit increases have failed to keep up with rising costs for older people.
CPI jumped 4.2 percent in the 12 months ending in April, up from 2.6 percent in March, according to the Bureau of Labor Statistics. The 12-month gain in April was the highest since September 2008, when it reached 4.9 percent.
The increase in the 12-month period in March came after increases of 1.7 percent in February and 1.4 percent in January. The spike of inflation this year has been primarily attributed to recent increases in fuel prices.
Social Security benefits have lost 30% of their purchasing power since 2000, according to a new study by the Senior Citizens League. To put it simply, seniors can barely afford $70 worth of food today compared to every $100 worth of groceries they could afford in 2000.
While CPI statistics through April predict a 4.7 percent rise in Social Security benefits next year, Johnson warned, “With such a high level of inflation volatility, this estimate could change several times before next year’s COLA is announced in October 2021.”