Social Security’s 5.9% Increase is Not Good News | Personal finance


(Maurie Backman)

For months old people Social Security were waiting to see what the 2022 cost of living adjustment, or COLA, will look like. This number is calculated based on data from the third quarter of the Consumer Price Index for Urban and Office Workers (CPI-W), and therefore a COLA could not be determined until after inflation data for September are not available.

This week, the Social Security Administration announced that seniors will be in line for a COLA of 5.9% in 2022. This is a major improvement from the 1.3% they received for 2021.

Where is it? A giant COLA may seem like a wonderful thing to the elderly. But in reality, this is not the massive windfall that Social Security recipients might think.

Image source: Getty Images.

It’s about following

The aim of COLAs is to help the elderly maintain their purchasing power in the face of inflation. If older people started collecting one benefit and continued to receive the same benefit for 20 or 30 years, they would eventually be unable to meet their living expenses.

The reason the 2022 COLA is so important is that inflation has been rampant this summer, pushing up the cost of food, gas and just about everything. While a giant raise can be helpful for the elderly, it’s also likely to be instantly swallowed up by higher living costs across the board. In fact, given the evolution of consumer prices, seniors are unlikely to make it this far in 2022, even with a big COLA at stake.


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