:max_bytes(150000):strip_icc()/AverageSocialSecurityBenefitsFellShortofInflationbyMoreThan1050SincetheStartofthePandemic-03b04ca68aa64041a05ffdfbe6a8422e.jpeg?w=1920&resize=1920,1267&ssl=1 "Inflation Beat Typical Social Security Hike By ,054")
Social Security cost-of-living adjustments have fallen behind inflation during the pandemic, with a typical retiree losing $1,054 of buying power since 2020.
That’s according to an analysis by the Senior Citizen League, an advocacy group for seniors, which released an analysis Thursday. The analysis showed the cost of living adjustments that Social Security recipients get each year fell well short of actual changes to the cost of living increases that households saw in 2021 and 2022.
The cost-of-living adjustment to Social Security benefits is intended to ensure recipients income isn’t eaten away by inflation—but because of how the adjustments are calculated, they are often a bit off the mark. The adjustment is always set in October, and is based on how much the Consumer Price Index has increased over the previous year. In years when inflation is rising, like it did in 2021 and 2022, the adjustment is usually behind the curve.
Fortunately for Social Security recipients, the reverse is true when inflation falls—and it is currently retreating quite dramatically. This year’s 8.7% adjustment is the highest in decades, with the average recipient set to gain back about $39 of buying power in January, according to the analysis.
Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.