The social security cost of living adjustment could be higher in the next year. But that doesn’t necessarily mean that the money will go further
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Welfare recipients could expect a larger adjustment in the cost of living in the next year if current economic developments continue.
How far these monthly performance reviews will go up depends heavily on inflation.
The Seniors League, a non-partisan senior group, released its first official estimate for 2022 on Wednesday, indicating that benefits could rise 4.7% from next January.
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If this estimate is correct, it would be the largest increase seen by retirees and other beneficiaries since 2009, when benefits rose 5.8%. In 2021, the social security cost of living adjustment was 1.3%.
The increase comes from the latest Bureau of Labor Statistics data in the Consumer Price Index for Urban Wage earners and Office Workers (CPI-W). The Social Security Agency uses this index to calculate the cost of living adjustment each year.
However, this estimate is preliminary and could change. The actual COLA for the next year is based on data for the third quarter.
The current estimate is based on a 12-month average inflation projection using data through April, said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
Much of the data that contributed to the estimate has to do with higher energy and gasoline prices, Johnson said.
In the absence of May in the data, the aftermath of a recent cyberattack on a major U.S. fuel pipeline that spiked gasoline and price spikes in certain parts of the country is missing.
If inflation falls and the estimate stays the same, it will help improve seniors’ purchasing power, Johnson said.
10 Fastest Growing Costs For Older Americans
|items||Costs in 2000||Cost in March 2021||Percentage increase|
|1.) Prescription drug out of pocket, generic, brand, specialty (out of pocket per year)||$ 1,102.00||$ 4,096.93||272%|
|2.) Medicare Part B premiums (per month)||$ 45.50||$ 148.50||226%|
|3.) Homeowner Insurance (per year)||$ 508.00||$ 1,414.00||178%|
|4.) Veterinary services||109,300 *||285,180 *||161%|
|5.) Home heating oil (per gallon)||$ 1.15||$ 2.86||150%|
|6.) Total costs for medical expenses (per year)||$ 6,140.00||$ 14,846.00||142%|
|7.) Potatoes (10 lbs.)||$ 2.98||$ 6.98||134%|
|8.) Propane (per gallon)||$ 1.01||$ 2.30||127%|
|8.) Forage (per pound)||$ 1.90||$ 4.31||127%|
|9. Gasoline (per gallon)||$ 1.31||$ 2.86||118%|
|10. Property taxes (per year)||$ 690.00||$ 1,494.00||117%|
“Much will depend on whether inflation continues until the COLA announcement and if inflation then slowly slows down so that it is lower than it is today by January 2022,” said Johnson.
The social security authority usually announces the adjustment for the next year in October.
Consumer price data through May shows that social security recipients have lost purchasing power, according to research by the Senior Citizens League.
If current inflation trends continue, “the loss of purchasing power could increase further in 2021,” said Johnson.