The Social Security Administration announced on Thursday that benefits for approximately 70 million Americans will increase by 8.7 percent in 2023.
But beyond that, an influential senator says there is very little on Washington’s docket that might help retirees navigating the ongoing price hikes.
“We try and try [but] we're putting fingers in the dike,” Sen. Roger Marshall (R-KS) said in a recent interview, arguing that overall inflation, which has risen 8.2% over last year with core inflation at a 40-year-high, will eclipse anything else on Congress’s docket anytime soon.
The comments came during a recent conversation about the chances of a new retirement reform law in Washington before the end of the year. Lawmakers are in the process of trying to reach a deal to encourage more retirement savings among Americans and increase flexibility for current savers.
Marshall says that that effort is stuck at the moment, though other lawmakers are more optimistic. But even if a deal is reached, Marshall said, “With inflation where it is and with the stock market down so much, it's just not going to do any good.”
Marshall’s interview was featured in a webinar released this week on cracks in the U.S. retirement system and how inflation is disrupting retirees' finances. It was produced by Yahoo Finance in partnership with the Bipartisan Policy Center’s Funding our Future alliance as well as the The Alliance for Lifetime Income.
‘A proactive study of how inflation would affect retirement plans’
This week's Social Security move marked the biggest increase in benefits in four decades and will help millions of Americans. But those same Americans have also seen the buying power of their private retirement savings plummet over the last year.
One of Marshall’s main contributions to the negotiations in Washington is to get more insight into the issue by requiring the Labor Department to study on the impact of inflation on retirement savings. His amendment was added to the package in June but negotiations have largely languished since then.
“I was going to hopefully set up a proactive study of how inflation would affect retirement plans,” said Marshall, “but guess what, now we can do a retrospective study.”
Marshall is also pushing ideas to make it easier for Americans to establish rainy day funds and put aside six months of cash in addition to their retirement savings efforts.
If lawmakers can come together and get the effort over the finish line, a bill would likely impact many Americans. There are provisions being debated for current retirees such as changing the rules around required minimum IRA or 401(k) distributions. There are also changes that would impact younger savers like an idea to link retirement savings with student loans and Marshall’s provision around emergency savings.
But it’s a complicated effort, and when lawmakers return to Washington next month, Congress will face a long to-do list, including avoiding a government shutdown, passing the annual defense bill, codifying same-sex marriage, reforming the presidential electoral process, providing Hurricane Ian relief, and possibly confronting OPEC+ over it’s oil policy.
‘It's folks in the middle where I worry’
A range of experts note that inflation is hitting retirees hard, with few options in the offing. Andrew Biggs is a senior fellow at the American Enterprise Institute who also joined this week’s webinar.
He noted that retirees on the lower end of the income spectrum will be protected by Social Security benefit hikes, while richer Americans have more ample savings to protect them.
“It's folks in the middle where I worry a little bit more about that,” said Biggs.
For now, even if retirement reform passes in the coming months, Marshall said, “There's just not much in there that could be a game changer.” The Republican senator is pushing instead for things like spurring U.S. energy and agriculture production to combat high gas and food prices.
It’s a common refrain among Republicans but one without a path to passage in the closely divided Capitol. As one recent example, Sen. Joe Manchin (D-WV) put forward a plan around energy permitting reform largely to try and spur production but the effort went down amid opposition from both sides of the aisle.
Manchin may try again on his effort this winter, but its prospects remain unclear amid ongoing opposition and Washington’s crowded docket.
Asked for a bottom line as to what Americans could do, Marshall said, “Get out and vote in November.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.