‘I’m strapped every month.’ Seniors struggle as inflation continues to outpace Social Security benefits

By Tami Luhby, CNN

(CNN) — When Stephanie Zebrowski retired and started collecting Social Security in 2018, she was able to get by on her monthly payment with a little left over before the next one arrived.

That’s no longer the case. Zebrowski, who worked as a financial editor at a brokerage firm, now finds that the $2,200 monthly payment she receives (after her Medicare premiums are deducted) has not kept up with inflation in recent years. That’s forced the 75-year-old to drain her savings to pay for essentials – such as groceries, gas, doctors’ visits and utilities – and make some unpleasant decisions.

Zebrowski, who once considered herself middle class, started visiting a food bank last year and keeps her home colder than she’d like in the winter, even though it aggravates her arthritis and leaves her in pain. She’s had to start creating meals “out of practically nothing,” adding that she’s “learning to like beans.”

“I’m strapped every month,” said Zebrowski, who lives in rural Jefferson, New York. “I’m spending almost every penny. It didn’t used to be that way.”

Like Zebrowski, many senior citizens are finding that their Social Security benefits are not keeping pace with the rising cost of living, especially in recent years. The payments are adjusted every year based on inflation, but many older Americans and their advocates have long said that the annual cost of living adjustment (COLA) formula doesn’t match the actual increase in expenses.

This year, the bump was 2.8%, or an additional $56 per month for the average retiree, who receives $2,071 a month. But a $17.90 increase in the standard monthly Medicare premium – the second-largest hike, in dollar terms, in the program’s history – to $202.90 ate into that raise.

The 2027 monthly adjustment, which is scheduled to be announced on October 14, could be around 3.5%, based on early indications. That would provide a retiree with around $72 more a month. But the benefit boost won’t go that far when the price of gas, beef, healthcare and other needs have soared, Mary Johnson, an independent Social Security policy analyst, told CNN.

“The inflation we have had in recent years has not gone away. It has not disappeared completely,” she said. “It just heated right back up again with the war in Iran.”

(Medicare’s standard premium is forecast to increase $6.60 a month for 2027, according to the program’s trustees.)

Less buying power

Social Security benefits have lost 13.7% of their buying power over the past decade, according to a recent analysis by The Senior Citizens League, an advocacy group. Put another way, a dollar of benefits in 2016 is only worth 86 cents today. That’s taking into account increases of 5.9% in 2022 and 8.7% in 2023 when inflation skyrocketed after the pandemic.

Payments would have to jump by nearly $296 a month, or about $3,550 annually, to restore their buying power for the average beneficiary, the analysis found.

Many older Americans depend on Social Security for a large portion of their income and can’t easily adjust to higher prices, Shannon Benton, the league’s executive director, told CNN.

“Gas prices are going to be gas prices, right? You can’t substitute that. You can’t substitute your medications for something else,” Benton said. “These are things that there’s just no wiggle room for seniors.”

Lawmakers, advocates and think tanks have floated myriad ideas for changing Social Security’s annual adjustment, though they haven’t gone far on Capitol Hill. One proposal would shift the formula to an inflation index tied to price changes based on the spending patterns of senior citizens, known as CPI-E. However, other measures would curtail the COLA as part of an effort to improve Social Security’s overall finances.

Selling possessions

Pat and her husband, who asked that their last name not be used for privacy purposes, are both around 75. She said they had been able to make ends meet on Social Security and savings because her husband did some handyman jobs for their neighbors in their Florida senior community. But health issues forced him to stop this summer, leaving them dependent on credit cards to pay for groceries, gas, medical and dental care, medicine and other expenses. They used to pay off the balance each month but can no longer do so.

Big increases in home and auto insurance premiums over the past two years have added to their financial strain.

Though Pat said a 3.5% adjustment would be better than they’ve received in some prior years, it’s still insufficient to keep up with all the other cost increases.

“These little raises just aren’t enough,” said Pat. “We’re still trying to catch up from previous years.”

The couple, who receive a total of roughly $2,850 a month after Medicare premiums are deducted, estimate they are about $1,000 short each month, even though they cook at home nearly every night and don’t take vacations. A looming concern is the expiration of the interest-free period on their credit card early next year.

The next step is to sell some of their possessions, like her husband’s tools.

“There’s nowhere else to cut,” Pat said.

For Peter Jovanovic, Social Security’s annual increases never fully kept up with inflation. But the 69-year-old said his roughly $1,700 monthly check buys considerably less these days since “everything has gone up in price.”

A former truck and taxi driver who had to stop working in his early 50s for medical reasons, Jovanovic had been able to get by because he found a cheap apartment to rent in upstate New York. However, he was then hit with a big rent increase after being forced to move because of issues with his landlord. That left him thousands of dollars in credit card debt that he’s been unable to whittle down.

Though he’s now living in subsidized senior housing, Jovanovic is still feeling the bite of higher grocery prices and utility costs. He doesn’t own a car, and his friends have started asking him to chip in for gas when they drive him to the supermarket and on other errands. Taxi and Uber rides cost more, too.

The estimated 3.5% adjustment for 2027 wouldn’t do him much for him since “everything is so expensive,” he said. He thinks he’d get about $57 more a month.

“It doesn’t come close to what I need to live halfway comfortable, just to afford little things in life,” he said. “I don’t have any luxury stuff.”

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