At the beginning of this year, retirees who receive SSI experienced their largest increase in four decades. The size of their checks rose by 8.7%, resulting in an average of $146 more each month. Although the increase was intended to keep up with inflation, it may appear insignificant given the two years of rapidly increasing prices. Nevertheless, state economists assert that it holds significant value, particularly in areas of the state with a high proportion of retirees.
In their quarterly revenue forecast last month, the Oregon Office of Economic Analysis stated that SSI makes up over 10% of the income earned by households in various coastal, southern, and eastern counties across Oregon.To determine the increase in the size of checks from year to year, Social Security employs a formula based on the Consumer Price Index. Following the Great Recession, inflation remained low, resulting in small yearly increases. In fact, there were no increases in 2009, 2010, and 2015.
SSI beneficiaries can anticipate another increase in their payments next year
With inflation still high this year, though not as high as in 2022, Social Security beneficiaries can anticipate another increase in their payments next year, which will be determined by the federal government in October. On a national level, retirees currently receive an average monthly Social Security payment of $1,847. According to state economists, approximately one-third of Oregon’s seniors rely mainly on this program for their income, while 6 out of 10 seniors depend on it for more than half of their monthly earnings.
The Oregon Office of Economic Analysis estimates that the larger Social Security payments will have the same economic impact statewide as adding 22,000 jobs. Social Security holds particular significance in regions of Oregon with lower per-capita income or a higher concentration of elderly residents, which often overlap.
Wheeler and Curry counties are the most reliant on Social Security in Oregon, with the program accounting for around 15% of all personal income in these areas, as reported by state economists. In contrast, Social Security only represents 4% of personal income in Washington and Multnomah counties.
Methodology used by the Social Security Administration
Due to the methodology used by the Social Security Administration to adjust payments based on inflation rates from previous years, the increased checks often fall behind actual price increases. During periods of swift inflation, this implies that the larger payments only account for the inflation from the prior year, and not the current higher costs of goods and services. This predicament can be particularly challenging for individuals who rely on these checks as a main source of income.
Despite this issue, state economists contend that when the larger Social Security payments are issued, they can contribute to the economic growth of entire communities.
In their report, the economists stated, “Even though these increases may be struggling to keep pace with actual inflation, they still provide a real boost this year that will have an outsized impact on households and spending in our rural economies.”