Inflation outpaced the typical Social Security increase by $1,054

Social Security cost-of-living adjustments have lagged behind inflation during the pandemic, with a typical retiree losing $1,054 in purchasing power since 2020.

That's according to an analysis released Thursday by the Senior Citizens League, an advocacy group for seniors. The analysis found that the cost-of-living adjustments that Social Security recipients received each year fell far short of the actual changes in the cost of living that households saw in 2021 and 2022.

The cost-of-living adjustment to Social Security benefits is designed to ensure that recipients' incomes aren't eaten away by inflation — but because of how the adjustments are calculated, they're often slightly off the mark. The revision is always set in October and is based on how much the Consumer Price Index has increased compared to the previous year. In years with rising inflation, such as 2021 and 2022, the correction is usually behind the curve.

Fortunately for Social Security recipients, the opposite is true when inflation falls, and it is. According to the analysis, this year's figure is the highest in decades, and the average shopper will gain about $39 in purchasing power in January.

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