With costs for things like food, utilities, gasoline, and housing in some parts of the country rising by double digits, even a 9% cost-of-living adjustment isn't going to be enough to cover those additional expenses. On average, retirees spend $3,810 per year compared to $4,055 for all households, which means the spike in electric, gas, and heating oil bills have hit older Americans especially hard. household as you still have virtually the same need for electricity, heating, and cooling in retirement as you do in your working years. As for utilities, retiree households spend nearly as much as the average U.S. #2022 social security increase freeFood expenditures are only slightly higher as retirees on average spend 40% of their budget on eating out, taking advantage of the social opportunity to dine out now that they have ample free time. Retirees also spend more of their budget on food and utilities than working-age Americans. But with labor shortages rampant across the healthcare industry, it wouldn't be surprising to see more inflation in healthcare in the near future as medical facilities have to boost pay to attract and retain workers. Even though seniors rely on Medicare for most healthcare expenses, you still may have to pay copays, costs for procedures that aren't covered like dental work, or may want a supplemental plan like Medicare Advantage.Īccording to the CPI, costs for medical services have risen 5.1% over the last year. Not surprisingly, retirees also spend more than working-age Americans on healthcare, at $6,833 a year, compared to $5,193 for all American households. While the housing boom during the pandemic may be good for retirees who own their own homes, rising housing costs could be a challenge for seniors who rent, especially in parts of the country where rents are rising by double digits. As a percentage of their household budget, retirees spend more on housing than working-age Americans, allocating 35% of their monthly budget to housing, compared to 33% for all U.S. The five biggest expenses retirees typically face are housing, transportation, healthcare, food, and utilities. According to a recent consumer expenditure survey from the Bureau of Labor Statistics, the average retiree household spends $50,220 annually, compared to the average across all U.S. Budgets are smaller as income shrinks and children grow up and move out. Retiree spending patterns are different than those of working-age Americans. Food prices have risen 10.9%, gas has jumped a whopping 44%, and utility prices are up 19%. As measured by the Bureau of Labor Statistics' Consumer Price Index, prices for essentials like food, gas, and utilities are all up substantially over the last year. Retiree expenses are also increasing faster than they have in 40 years. As of July, the CPI-W was up 9.1% on a year-over-year basis so the 2023 COLA is likely give a significant boost for most retirees.īut there's bad news, too. That's because Social Security benefits are raised each year according the cost-of-living adjustment (COLA), which is based on a version of the consumer price index (CPI-W), measured from the third quarter of one year to the third quarter of the next.įor 2022, the Social Security COLA, or increase, was 5.9%, but it's on track to be around 9% in 2023 based on recent inflation readings. Social Security checks are about to jump faster than they have in 40 years. If you're a Social Security recipient, you probably already know the good news.
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