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COLA 2022: can social security payments be affected by inflation in the US?

Inflation is hitting historic highs, seniors are going hungry and leaders seem uninterested in ensuring that Social Security benefits keep up with rising prices.

Inflation is hitting historic highs, seniors are going hungry and leaders seem uninterested in ensuring that Social Security benefits keep up with rising prices.

The Bureau of Labor Statistics has announced that since October 2020 consumers are on average paying 6.2 percent more for goods and services -- the largest increase in thirty years. 

From September to October, the Consumer Price Index (CPI) grew by 0.9 percent, the biggest spike since June when the same increase was recorded.

These increases can have serious consequences for households living on a fixed income, like social security recipients. The average social security beneficiary receives a monthly check of $1,543 which can make meeting ends meet difficult during periods of high inflation.

To calculate the cost-of-living adjustment (COLA), the Social Security Administration (SSA) compares the average Consumer Price Index: Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the current year to that of the past. This October, the SSA announced a historic increase of 5.9 percent based on CPI data from July through September 2020 and 2021.

The 2020 COLA, while higher than those seen over the last twenty years, is low compared to the actual increases in prices seen in the market over the last year. 

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Background on the 2021 COLA

In October 2020, the SSA announced that in 2021 beneficiaries would see an increase of 1.3 percent reflected in their benefits. However, between October 2020 and January 2021, prices increased by a little less than half a percent. Had the 2021 COLA reflected the continued increase in costs for consumers in 2020, the actual increases felt in 2021 should been closer to 1.7 percent.

Starting on 31 December 2021, millions of Social Security beneficiaries will see the 2022 COLA applied to their benefits.  If the SSA was able to account for this increase in the 2022 COLA, the rate would be closer to seven percent.

How is inflation impacting seniors?

The Seniors Citizen League reported hearing from seniors “that people are cutting their spending on prescriptions and groceries because that’s the last things they have left to cut.”

Social Security was established in 1945 after the poverty level among the nation’s eldest members hit fifty percent. The government and the public agreed that after working and contributing to the economy for decades, workers deserved to live out the rest of their days with dignity. The fact that beneficiaries are skipping meals and putting their health at risk, represents a moral failure to make good on this promise.

As mentioned by the Senior Citizens League, the quick increases in food prices are having a devastating impact on the lives of seniors. Before the pandemic and the subsequent inflation impacts, Feeding America reported that more than 5.2 million seniors struggled from food insecurity.

Seniors, both those who receive Social Security benefits and not, should know that they may be eligible to receive Supplemental Nutrition Assitance Program (SNAP) benefits. The eligibility requirements vary by state. According to eleiblity.com, the income cutoff for a single person is $1,287 or $1,726 for two.

What is the SNAP coverage gap?

In 2021, the average Social Security beneficiary typically had an income higher than this limit, falling into what some call a SNAP coverage gap. The coverage gap refers to people who have incomes so low that they are food insecure but too high that are ineligible to receive SNAP or other welfare benefits.

This issue is not unique to seniors; Just Harvest reported earlier this year that only “55% of food insecure individuals are income-eligible for food stamps.”

The coverage gap poses another problem that lawmakers should work to address.

Many lawmakers, particularly Republicans argue that eligibility for welfare programs should not create dependence on the government. Very few, however, have anything to say on the topic of people who work full-time jobs and still are unable to purchase enough food for themselves and their families.

Democratic and Republican presidents have made SNAP benefits harder to access, which has left the country in a situation where more than seventeen million children struggle with hunger. Whether it’s through strict work requirements or the exclusion of immigrant families, the most vulnerable members of our society suffer the consequences.

Many Republicans have been quick to bash the Biden administration for the rising inflation. None have proposed any legislative changes that would minimize harm for seniors or children. The blame game is easy, but leaders should know that while they play it, millions are going hungry, and seniors are taking risks with their health to make it to the end of the month.

Could the COLA be adjusted to account for further inflation?

The short answer is no.

The COLA is determined through a legal process outlined in the 1975 law that tied it to the CPI-W. 

But, lawmakers could take action to address the shortfall by passing a law that would peg the COLA to the monthly increases reported by the Bureau of Labor Statistics until the month-to-month variations inflation return to a normal level. At this point, no lawmakers have made introduced any legislation that would have this sort of impact.

This could become especially important if in November and December increases continue on their upward trajectory.

What is driving up prices?

The Bureau of Labor Statistics tracks the prices of goods and services which all fall under one of three broad categories: Food; Energy; and All items less Food and Energy.


At thirty percent, the energy sector has seen the most significant price increase over the last year. The price of fuel oil, including kerosene and diesel, has increased more than fifty percent since October 2020. Consumers are also paying significantly higher prices -- around 49.6 percent -- for gasoline.

Much of the increase in the gas market is related to a supply crunch being felt throughout the sector. With ten refineries closing their doors during the pandemic, the supply has yet to reach its pre-pandemic levels. Many companies have reported that they are struggling to find workers and thus continue to be limited in their production and logistical capabilities.

However, to follow the advice of President Biden if these companies who make billions in profits each year really want to solve the issue, they could try paying their employees more.


The CPI has tracked a 5.4 percent increase in food over the last year. In both September and October, the prices of food consumed at home increased by 1.2 and 1 percent respectively; meaning that compared to August 2021, consumers are paying around 2.2 percent more at the grocery store.