Social Security benefit checks will be much larger next year for retirees. Seniors receiving retirement benefits are entitled to annual cost of living adjustments (COLAs) to help maintain their buying power. The 2022 COLA will provide older Americans with a 5.9% benefit increase

While this may seem like a lot of extra money, the sad reality is that rising prices in some key areas are likely to outpace the increase and still leave many retirees worse off in terms of how far their money goes.

Here are the five categories of spending seniors have where prices will go way up, eating away at the value of the largest Social Security COLA in decades. 

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1. Food

According to the Senior Citizens League, a senior advocacy group, food prices are expected to increase between 1.5% and 2.5% in 2022 for food purchased for home consumption. Meanwhile, the prices of food purchased away from home will increase between 3% and 4% next year. 

This is significantly higher than the normal 1% to 2% increase in the cost of food that occurs in most years.

Food is often one of the key expenditures that seniors have, and it can be difficult to cut grocery costs while still maintaining a healthy and varied diet. However, cutting coupons, stocking up when items are on sale, and planning meals around grocery store sales could help seniors to defray some of the added food expenses retirees will likely face in 2022 that eat away at their Social Security raise. 

2. Rental housing

While annual rent increases of around 5% are generally the standard in senior rental housing, the Senior Citizens League indicates rental increases of 7% or higher will be more common in 2022.

The added costs of rental housing are likely driven by the eviction moratoriums that were put into place by the federal government -- and some state governments -- during the early parts of the COVID-19 crisis. 

The formula that is used to calculate Social Security raises underestimates the percentage of income seniors spend on housing costs, so a big bump up in rental prices could be especially damaging for retirees. That's especially true as moving to a less expensive place can be burdensome and disruptive. Living with roommates or family members could help seniors struggling with these expenses next year, though. 

3. Owner housing

Those who own, rather than rent, aren't immune from rising prices. Home prices have rapidly climbed in many parts of the country in recent years, as has the cost of building materials.

Rising home values will affect seniors who already own their properties, as that could result in higher costs of home insurance and property tax increases. Mortgage rates are also expected to go up in 2022, making it less affordable to borrow to purchase a home. 

4. Heating costs

Heating costs are expected to be between 21% and 25% higher in 2022, which could be especially devastating to retirees living on a fixed income.

Seniors will need to look for opportunities to save on home heating, such as improving the insulation in their home and sealing cracks around windows and doors in order to avoid seeing their higher Social Security checks disappear into the pockets of their utility providers. 

5. Prescription drug costs

Finally, premiums for prescription drug plans are expected to go up 5% in 2022, and Medicare Part D's out-of-pocket threshold before catastrophic coverage kicks in is going up 7.6%. While this threshold was previously at $6,550 in 2021, it will be $7,050 in 2022. Such a big increase indicates pharmaceutical companies are likely slated to raise prices next year.

Healthcare is another area that's not adequately accounted for when COLAs are calculated, and a rise in premiums and prescription costs could be especially devastating to retirees.

Sadly, seniors will need to account for these rising costs and shouldn't assume that the 5.9% COLA they're getting next year will be enough to fully cover them. Careful budgeting and shopping around will be needed to avoid losing ground, even with a large raise, at a time when costs are going up so rapidly on the very things most retirees tend to buy.