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Under President Joe Biden, the Social Security Cost of Living Adjustment may be massive.
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The effects of inflation are frequently felt most acutely by seniors on fixed incomes. The only silver lining to the recent consumer price index spike is the possibility of a larger Social Security cost-of-living adjustment (COLA) this year. The Social Security COLA in 2021 (for 2022) is expected to be between 5.3 and 6.1 percent. Since 2009, there hasn’t been a cost-of-living adjustment at this level. The cost-of-living adjustment for Social Security in 2021 will not take effect until January 2022. As a result, retirees’ budgets may be stretched thin in the coming six months. Rent is increasing, groceries are increasing, real estate prices are skyrocketing, and don’t get me started on health care and long-term care.
The Senior Citizens League, a nonpartisan senior organization, estimated a 5.3 percent Social Security COLA based on consumer price index data from the Bureau of Labor Statistics through May. The group revised its projection in June to 6.1 percent, the largest Social Security COLA since 1983.
The last time a cost-of-living adjustment for Social Security was greater than 5% was in 2009. Unfortunately, the boost was followed by two years of no growth in Social Security income. The Social Security COLA for 2020 only increased payments by 1.3 percent for 2021.
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ADDITIONAL INFORMATION FOR YOU
The annual Social Security COLA rate is usually announced in October by the Social Security Administration. The SS COLA is calculated using the three-month average rate of inflation. Depending on who you ask, we could witness an acceleration in inflation or a reduction in pricing pressures. Don’t make major financial decisions dependent on the possibility of a large Social Security COLA. Inflation, I believe, will return to more normal levels in the long run. Because there is so much pent-up demand (thanks in part to people being stuck at home during COVID), many sections of the economy will almost certainly continue to see price increases in the short term.
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David Rae’s contribution
The increase in your Social Security check will be determined by a mix of your underlying benefit and the Social Security COLA. If the cost-of-living adjustment for Social Security remains at 6.1 percent in 2022, and you receive the maximum Social Security payment of $3,895, you will receive an extra $237.60 each month. This would result in a yearly rise of $2,851.14.
Those getting the typical Social Security income in 2021 will see a smaller increase in benefits. In 2021, the average monthly Social Security benefit was $1,543. Again, assuming a 6.1 percent SS COLA, you may receive a $94.12 monthly increase in your retirement benefits. When you’re living on a fixed income, that extra $1,129.48 might make a big difference.
If you’re still working, be sure you have other sources of retirement income to assist you keep your lifestyle. Even if you receive the full Social Security payment, you will struggle to maintain your quality of living solely on Social Security. Consult a reputable financial planner to assist you choose the best time to file for Social Security and optimize your benefits./nRead More

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