by In 2022, Social Security recipients got a 5.9% cost-of-living adjustment (COLA). That was the largest increase in 40 years. The COLA coming in 2023 may be even bigger. Social Security calculates cost-of-living increases based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from September to September each year. According to the Bureau of Labor Statistics, the CPI-W has increased 9.4% from March 2021 to March 2022. So, unless inflation comes down, its projected that the next Social Security COLA could be 9% or higher. Without the annual COLA, many retirees would not be able to survive in an inflationary environment, especially those on fixed incomes. Additionally, low-interest rates have worked against retirees who depend
Topics:
Bob Williams considers the following as important: 5.) Alhambra Investments, Featured, Financial Planning, newsletter, retirement income
This could be interesting, too:
Marc Chandler writes Sterling and Gilts Pressed Lower by Firmer CPI
Ryan McMaken writes A Free-Market Guide to Trump’s Immigration Crackdown
Wanjiru Njoya writes Post-Election Prospects for Ending DEI
Swiss Customs writes Octobre 2024 : la chimie-pharma détermine le record à l’export
In 2022, Social Security recipients got a 5.9% cost-of-living adjustment (COLA). That was the largest increase in 40 years. The COLA coming in 2023 may be even bigger.
Social Security calculates cost-of-living increases based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from September to September each year. According to the Bureau of Labor Statistics, the CPI-W has increased 9.4% from March 2021 to March 2022. So, unless inflation comes down, its projected that the next Social Security COLA could be 9% or higher.
Without the annual COLA, many retirees would not be able to survive in an inflationary environment, especially those on fixed incomes. Additionally, low-interest rates have worked against retirees who depend on interest to supplement their income.
The last high inflationary period in the U.S. was in the early 1980s. In 1981, the Social Security Administration announced that benefits would increase by 11.2% the following year. In May 1981, the interest rate on three-month Treasury bonds reached a high of 16.3%, almost 5% higher than the adjustment in Social Security benefits.
Today, it’s different. In March 2022, the rate on three-month Treasury bonds was 0.44%, more than 5% lower than the previous COLA. The Federal Reserve just raised short-term interest rates to fight inflation with an expectation of additional rate hikes during 2022. And while that will mean more interest to retirees than they have been receiving, it will be a slow process that may not help them much.
While the possibility of a 9% increase to Social Security checks sounds really good, you have to keep things in perspective. The cost of Medicare coverage will also go up. In 2022, Social Security checks increased by 5.9% but the cost of Medicare went up 14.5%.
You Might Also Like
No Pandemic. Not Rate Hikes. Doesn’t Matter Interest Rates. Just Globally Synchronized.
2022-06-06
The fact that German retail sales crashed so much in April 2022 is significant for a couple reasons. First, it more than suggests something is wrong with Germany, and not just some run-of-the-mill hiccup. Second, because it was this April rather than last April or last summer, you can’t blame COVID this time.
Can’t Blame COVID For This One
2022-06-03
Late in March 2021, then-German Chancellor Angela Merkel announced a reverse. Several weeks before that time, Merkel’s federal government had reached an agreement with the various states to begin opening the country back up, easing more modest restrictions to move daily life closer to normal.
Peak Policy Error
2022-06-01
Another economic discussion lost to the eventual coronavirus pandemic mania was the 2019 globally synchronized downturn. Not just downturn, outright recession in key parts from around the world, maybe including the US.
The Short, Sweet Income Case For Ugly Inversion(s), Too
2022-04-04
A nod to just how backward and upside down the world is now. The economic data everyone is made to pay attention to, payrolls, that one is, in my view, irrelevant. As is the consumer price estimates from earlier this week, the PCE Deflator. That’s another one which receives vast amounts of interest even though it is already old news.
We Can Only Hope For Another (bond) Massacre
2022-03-30
To begin with, the economy today is absolutely nothing like it had been almost thirty years ago. That fact in and of itself should end the discussion right here. However, comparisons will be made and it does no harm to review them.I’m talking about 1994, or, more specifically, the eleven months between late February 1994 and early February 1995.
Baby Boomer Retirement at Risk
2022-03-20
The seven deadliest words in the English language—We’ve never done it this way before. And that certainly applies to Baby Boomers whose prospects for retirement are different than any preceding generation.
Weekly Market Pulse: Is This A Bear Market?
2022-03-16
I don’t know the answer to the question posed in the title. No one does because the future is not predictable. I don’t know what will happen in Ukraine. I don’t know how much what has already happened there – and what might – matters to the US and global economy. I don’t know if the Fed is making a mistake by (likely) hiking interest rates by an entire 1/4 of 1% this week.
How the IRS Taxes Your Retirement Income
2022-03-13
Oh, the day you can hang up your career and ease into that status you’ve been working toward most of your adult life, the place that brings a smile to your face, your happy place where you no longer answer to an employer, where you set your own schedule—that magical place called “Retirement.”
Tags: Featured,Financial Planning,newsletter,retirement income