The 65 million U.S. seniors getting an 8.7% bump in their Social Security benefit this month are actually falling behind on inflation, according to the Senior Citizens League.

Social Security has lagged inflation by $1,054 for the average beneficiary since the start of the pandemic, according to the non-partisan senior advocacy group. That’s taking into account the cost of living adjustment (COLA) and inflation in 2020, 2021 and 2022.

As of the last reading, for December, inflation in the U.S. has ticked down to a still-high level of 6.5%.

Pricey Medicare

The shortfall in seniors’ standard of living would be even greater if the deduction for Medicare Part B premiums was taken into account. That Medicare deduction was $1,735 in 2020, $1,782 in 2021 and $2,041 in 2022, the latter one of the largest increases in Medicare history.

“It’s a good thing for people who are planning for retirement to understand the impacts of inflation — not just on your Social Security benefits, but especially on retirement benefits that are not protected for inflation, says Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.

The Medicare premiums that seniors pay vary widely, Johnson adds. In fact, in 2023, The Senior Citizens League projects that 50% of Medicare beneficiaries will spend up to $4,800 for their health care — including premiums, out-of-pocket costs and dental and vision exams, the latter two of which Medicare does not cover.

Thirty percent will pay more than $4,800, up to $12,828; and 20% will pay greater than $12,828.

So, even if just the premiums were deducted from the COLA boosts that the Social Security Administration gave seniors since 2020, Social Security benefits have actually been flat in the past three years, according to the League.

“While Social Security recipients are looking forward to an 8.7% increase in Social Security benefits in January, inflation in 2022 has taken a toll on retiree budgets,” the League says. “Many retirees have been forced to spend through savings far more quickly than planned, and those without savings have turned to food pantries and low-income assistance programs in higher numbers.”

One-third of seniors applied for food stamps or visited a food pantry in 2022, up from 22% in 2021, and 17% sought assistance for heating bills, up from 10% in 2021.

Taxes on Income Above $25,000

It is also important for seniors to know that they may owe taxes on their Social Security benefits when their combined income is more than $25,000 for single filers and $32,000 for couples, the League notes. The 5.9% COLA in 2022 has 57% of older taxpayers worried that they will be faced with a higher 2022 tax bill.

Even with a 8.7% COLA for Social Security benefits in 2023, prices would have to come down substantially for seniors to be able to keep up with inflation, Johnson says.

“It’s going to be extremely difficult for people to recover, if at all,” Johnson says.