The one upside to surging inflation is that those getting some government checks will see bigger payments, with Social Security announcing a 5.9% cost-of-living adjustment Wednesday.
The average monthly check for a retired worker will rise nearly $100 a month, from $1,565 this year to $1,657 next year.
For an older couple where both spouses get benefits, the average monthly check will rise from $2,599 to $2,753, Social Security said.
It’s the largest increase since 1982, when the country was still emerging from the inflationary years of the late 1970s.
Advocates for Social Security said the benefit hike is desperately needed as those on fixed incomes face huge challenges making ends meet amid soaring prices.
“Today’s announcement of a 5.9% COLA increase, the largest increase in four decades, is crucial for Social Security beneficiaries and their families as they try to keep up with rising costs,” said the AARP.
The increases will start for some recipients at the end of December and others in January, depending on the type of Social Security benefit.
Social Security’s payroll tax ceiling also will rise next year, meaning the first $147,000 of income will face the 6.2% levy on individual income. That’s up from $142,800 this year.
Under the law, Social Security’s payments are tied to the Consumer Price Index for Urban Wage Earners, a Labor Department yardstick for inflation.
The average annual adjustment over the last decade was less than 2%, and in 2015 it was actually 0.
Those days are gone, as the coronavirus pandemic and supply chain problems have sent costs soaring globally.
Mark Zandi, chief economist at Moody’s Analytics, told the New York Post that inflation is costing families at the median U.S. income an extra $175 a month in additional food, fuel and housing. The median family income is about $70,000.
Empty shelves at retail stores have become common, particularly in less urban areas.
And inflation has become a major political liability for President Biden, who announced steps early Wednesday to try to untangle kinks in the supply chain.
Republicans argue the problem runs deeper than trouble unloading shipping containers at ports. They blame a new round of coronavirus spending Democrats powered through Congress earlier this year for weakening the pandemic recovery.
For Social Security itself, while the cost-of-living adjustment was welcome, senior citizen groups said the program needs bigger fundamental changes.
Some groups are calling on Congress to increase the base level of benefits, or using a different yardstick to determine inflation which would better reflect the costs older people face.
But Social Security is already in grim fiscal shape, with the program paying out more each year than it gets in taxes and interest payments.
It is now eating into its trust funds, which will be depleted early in the next decade. At that point, under the law, checks would have to be reduced by an estimated 24 cents of every dollar promised.