Darrah, who lives in subsidized senior housing, said prices have gone up sharply for food, as well as for personal and household products, and she’s fallen behind on some of her bills, though she’s working to catch up. She said she does not know if recently announced cost-of-living adjustments will be enough to offset higher prices, but she hopes they will be.
“We’ll just have to wait and see,” she said.
More from this project:
- Social Security, food stamps, minimum wage see big increases. But are they enough?
- Food costs eclipsing historic Social Security, minimum wage increases
The Social Security Administration this month announced that benefits next year will increase by 8.7%, the largest payment increase in more than 40 years. This comes out to an average increase of more than $140 per month. The average monthly benefit for retirees was about $1,681 this year.
But the Senior Citizens League earlier this year said that Social Security benefits have lost 40% of their buying power since 2000.
The organization said the annual cost-of-living adjustments have not kept pace with actual inflation, especially when it comes to retiree costs.
The league’s calculations are based on 37 goods and services typically used by retirees.
“Retirees know all too well that Social Security benefits don’t buy as much today as when they first retired,” Mary Johnson, a Social Security policy analyst for The Senior Citizens League, said in a prepared statement.
Social Security lifts many older Ohioans out of poverty, and 87% of Ohio’s residents 65 and older receive benefits, according to Social Security Administration data for December 2020.
About half of the nation’s 65-and-older population live in households that rely on Social Security benefits for at least half of their income, according to research published by the administration.
Benefits account for at least 90% of family income for about one-quarter of U.S. households with seniors, the research says.
Retirees who depend on a fixed income like Social Security will find the recent cost-of-living increases somewhat helpful but inadequate to meet the demands of higher inflation, said Rea S. Hederman Jr., vice president of policy with the Buckeye Institute, a conservative-leaning think tank.
“Inflation is very harmful to low-income families who are often already buying cheaper brands of food and household goods,” he said. “Families with higher incomes can stop buying brand names and substitute for generic goods to reduce costs, but low-income families are often already buying the lowest price goods available. They can not swap to a lower cost item.”
Economic worries
AARP Ohio did a listening tour earlier this year in five communities across the state and the nonprofit also polled Ohioans 50 and older online about their concerns and thoughts ahead of the November election, said Michelle Shirer, the organization’s communications director.
Only 12% of respondents felt very confident that they have saved enough money to last throughout their retirement, the AARP Ohio found.
About two-thirds of respondents said they ignored or delayed seeking health care for financial reasons, Shirer said, and a slightly larger share of older Ohioans indicated they were having difficulty paying housing costs.
Many older Ohioans have watched their retirement savings and investments dwindle because of stock market volatility this year, and economists predict a recession could be imminent, which could cause turmoil in the financial markets.
Rising prices mean retirees may see a gap between their planned incomes and what they actually need to pay their bills, said T. Rowe Price.
If retirees draw down more from their accounts than what they expected due to higher prices, it could hurt the long-term sustainability of their retirement plans.
Most Social Security recipients are retirees (70%), but other beneficiaries include retired workers’ spouses and children and disabled workers and their family members.
Talya Thompkins, 33, of Dayton, has received Social Security disability benefits since she was a child, and she lives with her mother, who she said also relies on Social Security income.
Thompkins said she can’t live on her own because the monthly payments are not sufficient to pay for housing and other essentials, like food and clothing, all of which are getting more expensive.
“It’s something, but it’s not enough,” she said.
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