Lesson to be learned about retirement

Some Social Security Beneficiaries Need an Extra $6,200 in 2023 Just to Maintain Buying Power But COLA for 2024 Could Be Just 3.1%

May 5, 2023

By Mary Johnson, Social Security and Medicare Policy Analyst

The Senior Citizens League’s (TSCL) latest study on Social Security Buying Power found that the average person who retired before 2000 (those age 85 and older) would need an extra $516.70 more per month ($6,200 in 2023) than he or she is currently getting just to maintain the same level of buying power as in 2000. In fact, Social Security benefits have lost 36% of their buying power since 2000.

Inflation is moderating, but a lower rate of inflation doesn’t necessarily mean that bills will slow down or that older households will see some improvement in household budgets, at least not right away. Our study confirms that the prices consumers pay simply aren’t growing as fast as a year ago. On the other hand, declining prices are pointing to a significantly lower Social Security cost-of-living adjustment (COLA) for next year of 3.1%.

I don’t have a lot of confidence in the predictions by TSCL because it consistently over estimates the next Social Security COLA. Current inflation indicates a 2024 COLA of 2% not the 3.1% TSCL projects.

However, two inflation calculators indicate that to buy what cost a dollar in 2000 will take $1.76 today. The average Social Security benefit for retired people in 2000 was $816.00 per month and to keep pace with overall inflation you would need $1438.00. Since 2000, the aggregate increase in monthly benefits via COLAs is 64%. This means the average monthly benefit has increased from $816 in 2000 to $1,336.90 by 2022. That’s a shortfall of $101.00.

TSCL says many expenses are unique to seniors and thus their expenses have increased more – in some cases perhaps but not in all for sure. Senior spending is as unique as anyone else. In addition, TSCL relies on surveys for many of its assumptions. What do you think seniors looking for higher benefits are going to say?

Here is an example of TSCL logic.

The good news is that 8.7% COLA increase in 2022 exceeded the actual rate of inflation in every month so far this year by an average of 2.6%. That’s about $44.90 per month based on an average Social Security benefit of $1,694.00. But that so-called cushion is completely consumed by the $164.90 per month Medicare Part B premiums which is automatically deducted from Social Security benefits.

The Part B premium in 2023 decreased by $5.20 in 2023. The Part B premium was in effect in 2022 and 2023 and well before, so how could the current lower premium consume the $44.90? Now, if the premium had increased by the amount, TSCL would have a point, but that is not the case. The lower ongoing premium didn’t consume anything.

The lesson to be learned from all this is that you need a plan in retirement to deal with inflation. You need an additional income stream you can access when needed. It could be a form of interest say from bonds or dividends from stocks. It could be a few years of expenses held in a money market account. The point is you can’t rely on Social Security to keep you whole – and that was never the intent.


  1. I am not sure there is really any GOOD NEWS when it comes to inflation and the overall state of the economy. Debt and deficits just keep going up, up, up. Even with COLAs you are not staying even, because you pay the higher prices for 12 months before you get an increase. The only question is when will we have the next financial crisis. Debt levels for households, companies and governments around the world are at all time highs. Problems like immigration, homelessness, drug addiction and mental health seem to be getting worse. What is really driving all these mass shooting events. How many of the shooters where on an Antidepression or Antipsychotic drugs? Our country has many problems that need to be addressed and our politicians do not seem to have the ability to fix any of them. They have what I like to call “the emperor has no clothes” syndrome. Throwing more money at a problem does not equal solving the problem, but that seems to be what every politician thinks needs to be done.


  2. A smaller percentage of Americans age 65+ are living in poverty today than in 2000, dramatic declines since the 1960’s. The percentage of Americans age 65+ living in poverty is less than children (under age 18) and less than adults (18 – 64).

    Social Security and poverty are income features. What all these studies ignore is the balance sheet of households. Most households < age 65 are in debt of one form or another. While, at the same time, a substantial portion of the wealth in America belongs to those of us age 65+ (yes, most of us earned it). Keep in mind that those who are working (almost all of whom are ages 18 – 64, present company excepted), are paying those Social Security taxes – directly from paychecks (on an after tax basis) and indirectly through the reduction in wages paid by employers.

    So, looking only at buying power from some but not all income sources, ignoring who shoulders the cost, ignoring investment earnings, etc. is comparable to buying a car wearing a blindfold without a test drive.


  3. News flash, my buying power has been reduced by 36% too since 2000 and I am not on Social Security.

    Anybody who retired in 2000 and was working during the high inflationary periods of the 1970s & 1980s should know better where we had double digit inflation rates. High periods of inflation happen. They should have planned for inflation.

    Those that have recently entered the workforce since 1990 have rarely seen inflation go over 4%. Let these last two years be a lesson and you cannot count on social security or pensions payouts (if you have one) to be fully adjusted for inflation. You can only depend on yourself to create a secure retirement.

    I have been retired now for over 5 years. My plan for inflation is Social Security. When I can no longer maintain my current life style because of inflation, then I will start collecting to fill in for the cash short fall.


  4. I don’t read anything from the TSCL and their report on SS is a good reason why. Your comments are right on.


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