The Senior Citizens League, a nonpartisan group, estimates that Social Security beneficiaries will see a record high adjustment in the cost of living by 2023. The group sees a 9.6% increase in payments based on the latest consumer price index, released last week. That’s an additional $159 per recipient on average.
But waiting for an annual increase as prices rise year-round is the hardest thing for people who have no other significant income.
I first met Michael Broward in line at a food bank in downtown Albuquerque, New Mexico. It was just before Thanksgiving last year, and inflation had begun to cut into his monthly Social Security check.
“I’m a little short on money because I have a steady income, and right now the bills are — it only leaves me with about $100 extra a month,” Broward said. “So, it leaves me a little shy about the food situation.”
At the end of the line, he got a frozen turkey for his holiday meal and some staples, like dried beans and peanut butter.
A few months later, in early 2022, Broward got a nearly 6% boost to account for inflation. I checked in with him again this summer.
“When we got our last cost of living it was nice, like $140 or something like that for me. But it’s all gone now because of inflation,” he said. eating that adjustment in the cost of living.”
Broward said he’s lucky his rent hasn’t gone up. He eats less meat to save on groceries, but even his favorite substitutes are getting more expensive.
“Eggs have also skyrocketed because they used to be about a dollar a dozen, maybe a dollar and a quarter. And they’re about $2 now, like a dozen, I think.”
Between those increased costs and payments on a loan he just took out for dental work, “I can’t keep up right now.”
The Social Security Administration uses a formula based on the consumer price index to adjust retiree benefits — and it only does it once a year.
“In most years, that’s not a problem,” said Elaine Waxman, a senior fellow at the Urban Institute’s Income and Benefits Policy Center. “Because we’ve generally had pretty low inflation in this country. But this is a period that really tested that.”
Prices have risen so fast that Waxman said retirees are feeling the lag between prices that seem to be rising every day and the annual adjustment of benefits.
Food budgets are usually the first to be cut, Waxman said. “People will often cut back on variety, so they’ll be eating about the same small number of things. Substituting them toward calorie-rich and cheaper.”
This can translate into a less healthy diet or food insecurity. When inflation hits a certain percentage, Waxman said, it should lead to more frequent reassessments.
Economist Alicia Munnell, head of the Center for Retirement Research at Boston College, agrees that the slowdown could pose problems in times of rapid inflation.
“However, I think you have to keep an eye on the price,” she said, adding that Social Security is already designed to prevent inflation from eroding pensioners’ budgets.
“At some point, inflation is going to come down and retirees will get more than they need because it’s going to be a retrospective look at high inflation,” Munnell said.
Over the course of a full inflation cycle, she said, things usually balance out. “It’s too little early, and it will be too much by the end.”
But for now, many retirees need to tighten their budgets. Michael Broward in Albuquerque said he can pay his rent, he gets plenty to eat — it’s the discretionary things he cuts back on.
“I don’t eat out, I don’t go to the cinema. I don’t see myself flying anywhere,” he said.
Or even drive to many places other than the church and the supermarket. “The price of gasoline has even stopped me from going to the top.”
The top of the Sandia Mountains that overlook Albuquerque, ie.
“And I like going into the mountains, and I know it’s not that much money,” Broward said. “But darn it, everything – oil prices to change your oil, tires – is going up. I don’t want to spend $150 a tire and not be shocked by it, or a battery.”
He is careful, because for the time being there is no room in his budget for unexpected bills.
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