The Spending on Necessities has Increased
Families that rely on social security are spending a larger percentage of their monthly benefits on necessities compared to a year ago, even after this year’s cost-of-living adjustment that raised the value of checks. According to an analysis by The Balance, spending in April on food, housing, gasoline, and utilities such as gas and electricity amounted to 70% of the average monthly social security payment of $1,479 (or $2,958 for two-person households). Last year, spending on the same items accounted for 60% of the average monthly social security payment. The Balance’s analysis examined spending and inflation from the Bureau of Labor Statistics and other sources, in addition to the average monthly benefits from the Social Security Administration.
The Impact of Inflation on Monthly Payments
In monetary terms, the value of the social security monthly payment in April (the latest figure available from the Bureau of Labor Statistics) was $60 less compared to last year due to inflation.
The Impact of Rising Prices on Social Security
Higher gasoline prices and home utility costs are among the biggest contributors to rising prices overall, with gasoline prices having increased by over 44% in the past year, costing over $300 a month. The average natural gas bill is now $46, up 20% from 2021. Electricity costs have also risen by nearly 11%, reaching $130 a month.
The Impact of Rising Food and Housing Prices
The cost of food and housing has also increased, impacting fixed incomes. Food prices rose by 9.4% over the last year, and unfortunately for Americans trying to save money by cooking at home, grocery costs increased by 10.8%. This rise has outpaced the increase in dining out costs, which rose by 7.2%.
The Impact of Rising Rent Prices
Rental costs nationally increased to an average of $1,326 in April, compared to $1,313 in March. Fortunately, nearly 80% of Americans aged 65 and older owned their homes as of 2018, meaning the rise in housing costs may not significantly affect many social security beneficiaries. However, for any American struggling to pay bills, inflation can be devastating if housing, medical care, and food costs rise significantly.
The Impact of Inflation on Different Cities
Costs for food, housing, medical care, transportation, and other expenses inflated by 11% in Phoenix, the highest inflation rate among all cities studied. Atlanta, Tampa, and Riverside, California, experienced inflation rates of 10% or more. Residents of Boston and Washington, D.C. saw the lowest increase in inflation at 7.3%, which is below the national inflation rate of 8.3%.
The Impact of Inflation on Healthcare Costs
Some of the things that seniors buy are not increasing in cost as quickly. Healthcare costs for hospital services, nursing homes, and prescription medications increased by less than 3%, despite health insurance costs rising by 10.4%. Regionally, Los Angeles residents pay more for healthcare, with costs rising by 6.5%. In contrast, healthcare costs in Baltimore increased by only 0.1%.
The Impact of Inflation on Personal Budgets
Although inflation appears to be declining—from 8.5% in March to 8.3% in April—costs are still rising, tightening American budgets and paychecks. This is particularly true for Americans on fixed incomes who cannot easily increase their earnings through salary negotiation or taking higher-paying jobs.
Methodology
Study
The percentage changes in consumer prices were obtained from the Consumer Price Index of the Bureau of Labor Statistics. The average Social Security benefit was obtained from the Social Security Administration and adjusted for inflation using the Consumer Price Index for All Items annually. Dollar amounts for products were sourced from average price data from the Bureau of Labor Statistics or the retail market news dataset from the Agricultural Marketing Service of the USDA. Monthly average consumption data were obtained from the petroleum liquid supplier sales surveys and other basic natural gas consumption surveys for 2015, as well as the average daily food consumption by food source and demographic characteristics for 2017-2018 from the Energy Information Administration and the USDA. Rental cost data were sourced from rent data and estimates from Apartment List. The average American household size was obtained from the 2020 population estimates from the U.S. Census Bureau.
Correction – June 30, 2022
This article was updated to correct the dollar amount for the cost of rent, food, and utilities compared to last year in the description for the chart “Rising prices for gasoline, natural gas, meat, and dairy products drive daily expense costs.” Major costs such as rent, food, and utilities like gasoline, natural gas, and electricity are approximately $232 more expensive than last year.
Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we verify facts and maintain the accuracy, reliability, and quality of our content.
Bureau of Labor Statistics. “Consumer Price Index Summary.”
Social Security Administration. “2022 Cost-of-Living Adjustment Information.”
Bureau of Labor Statistics. “Consumer Price Index Databases.”
Social Security Administration. “Benefits Granted by Type.”
USDA. “Market News Data Download.”
Energy Information Administration. “Petroleum and Other Liquids.”
Energy Information Administration. “Petroleum Liquid Supplier Sales.”
Energy Information Administration. “Natural Gas Summary.”
Energy Information Administration. “2015 Residential Energy Consumption Survey.”
USDA. “Average Daily Food Consumption by Food Source and Demographic Characteristics 2017-2018.”
Apartment List. “Rent Data and Estimates.”
U.S. Census Bureau. “2020 ACS 5-Year Estimates.”
Source: https://www.thebalancemoney.com/inflation-pushes-needs-to-70-of-social-security-checks-5324591
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