So as companies struggle with COVID-related shortages of supplies and workers, inflation is soaring at rates that we haven’t seen in years. Steeper prices for gasoline, food, cars and several other things are squeezing Americans’ pockets, especially older people living on fixed, often modest incomes. Despite these challenges, the inflation spike is likely to provide seniors with their largest Social Security raise in almost four decades. This Wednesday, October 13th, the government is expected to announce Social Security's 2022 cost of living adjustment, or COLA, which will impact a total of 55 million people including retirees, dependents and survivors. The final COLA amount is calculated annually when the US Bureau of Labor Statics releases its final month of third quarter Consumer Price Index data. The COLA raise has been even considered a necessity for a large population of low-income seniors that are now scrambling to find ways to save money, as inflation continues to take its toll.
So the question on everyone’s mind becomes, will this significantly larger Social Security increase be enough to counter the crippling economic effects of inflation? Well based on how inflation was in 2020, Social Security's cost of living adjustment for this year was just 1.3%, which raised benefits checks by an average of only $20. However, that increase has been dissolved largely due to price increases in 2021. The COLA for 2022, however, is most likely to be far greater, at around 6.1%, according to the Senior’s Citizen’s League. The size of the COLA is calculated each year using the government's inflation numbers from the third quarter, which is inclusive of the months of July, August and September. The final data for the month of September, which is the last month’s data needed to calculate the final COLA estimate, is due for release this Wednesday. Therefore, if the advocates groups are correct, Social Security checks next year will be the largest they’ve ever been since 1983, when the COLA was 7.4%.
Even so, a 6.1% increase in this year's average monthly benefit of $1,555 would provide a retiree with about $1,650 per month, which translates to $95 more in their paycheck each month. Not exactly the biggest help seniors were looking for... Mary Johnson, a policy analyst with The Senior Citizens League, even mentions that some Social Security recipients could see cuts in other benefits, due in part to their larger checks. “Higher income could lead to trims in food stamps, rental assistance, or Medicare Extra Help, which covers most prescription drug costs”.
The Senior Citizens League says many older Americans can't wait around for the Social Security COLA to take effect in January. With a reduction in food and healthcare costs, this puts older Americans at a much higher risk of potentially life-threatening issues such as malnutrition, or an inability to afford life-saving medications. As a result, the advocacy group is calling on Congress to provide seniors with an immediate income boost — in the form of emergency $1,400 stimulus checks for people on Social Security. A petition drive launched in early September aims to approve a direct payment to help the elderly cope with these painful lifestyle changes. Notable price increases this year include a 48% surge in gasoline costs and a 39% jump in home heating oil, according to research. In a letter sent to every member of Congress, Chairman Rick Delaney from the Senior’s Citizen’s League remarks that "We’ve heard from thousands of seniors who have exhausted their retirement savings, who have started eating just one meal a day, started cutting their pills in half because they can’t afford their prescription drugs".
Now although The Senior Citizens League boasts more than a million supporters, there’s a good chance that the petition for stimulus checks may be ignored by lawmakers, at least for now. The reason for this being, lawmakers are currently pressed to focus on other matters including President Biden’s infrastructure spending bill, and the debate about whether or not to raise the US Federal debt ceiling. Once those multi-trillion dollar items are crossed off the list, I believe the government will be a lot more willing to turn their attention to the massive crippling economic issues facing seniors.