Many people are prepared to start spending again as many more businesses and stores reopen from lockdown. However, according to recent Labor Department data, they’ll find that there are certain items that have seen the largest price increase in more than a decade.
Significantly, Social Security recipients are seen to get a major cost of living adjustment by next year despite seeing a steep rise in the prices of everything from gasoline, cars, and food.
CNBC reported that the adjustment could be as high as 5.3% in 2022, which shows a substantial rise from the 1.3% COLA that was implemented for 2021. This is the biggest adjustment rise in more than a decade.
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COLA and Inflation
The 5.3% COLA estimate for 2022 was calculated by The Senior Citizens League, a non-partisan seniors organization, and is based on Bureau of Labor Statistics Consumer Price Index data through May.
However, a lot of this will depend on how the US economy will perform in the coming months and whether the Federal Reserve raises interest rates to deal with higher inflation.
“When the prices on the goods and services that retirees depend on go through the roof, their Social Security benefits don’t buy as much, and that causes enormous financial stress for all retirees,” said Mary Johnson in a press release. Johnson is a Social Security policy analyst for The Senior Citizens League.
According to The Senior Citizens League, they surveyed 1,125 participants from mid-January through April 20, 2021. Based on their findings, more than 62% of retirees think that Social Security cost-of-living adjustments need a guaranteed minimum of 3%.
The Social Security COLA for next year is normally announced in October, based on a Forbes report last month, and it is based on the current rate of inflation. An increase of 5.3% cost of living adjustment would be the biggest adjustment seen ever since COLA was 5.8% in 2009.
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In a recent FedSmith.com column found on The Senior Citizens League website, the author and human resources expert said that “the overall inflation rate has risen 5% over the last 12 months — the biggest jump in nearly 13 years.”
He also added that the May rate of inflation is also higher and could increase again this month.
“While no one knows the exact percentage of the COLA increase retirees will see in January, we do know there will be an increase,” Smith wrote. “That is different than in some recent years when there was not any increase.”