The Social Security Administration announced that the cost-of-living adjustment (COLA), which is an increase in social security benefits to counteract inflation, increased by 1.3% for 70 million Americans on Social Security and Supplemental Security Income.
When Social Security Runs Out: What the Program Will Look Like in 2035
Learn More: 17 Tips To Live Comfortably Off Just a Social Security Check
The estimated average monthly benefit increased by $20 per month for 2021, reports CNBC. This increase, however, isn’t enough to account for the rising costs for seniors.
The Senior Citizens League, one of the nation’s largest nonpartisan seniors groups, surveyed 1,125 participants from mid-January through April 20, 2021. According to their data, more than 62% of retirees think that Social Security cost-of-living adjustments need a guaranteed minimum of 3%.
“When the prices on the goods and services that retirees depend on go through the roof, their Social Security benefits don’t buy as much, and that causes enormous financial stress for all retirees,” said Mary Johnson, a Social Security policy analyst for The Senior Citizens League, in a press release.
The League stated that they are working with Congress to increase benefits for retirees to the 3% guaranteed minimum and to use the Consumer Price Index for the Elderly, or CPI-E.
The latest cost-of-living adjustment decision was based on an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, from the third quarter of 2019 through the third quarter of 2020; however, inflation has risen since last year by 1.4% in the first quarter of 2021. The CPI-W was more than 3% higher as of the end of March than it was the previous year, according to CNBC.
The largest COLA increase was in 2008 by 5.8%. Since 2010, the average increase has been 1.4%, according to data from the Social Security Administration. An increase to monthly Social Security benefits will be determined by CPI data through September.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Social Security Cost-of-Living Adjustments Aren’t Enough to Pay Higher Costs for Seniors