Did you know that Social Security benefits increase? It true, a cost-of-living-adjustment (COLA) determines whether benefits should rise or not. 2022’s COLA resulted in seniors getting a 6 percent increase to their benefits, to offset finance strain from the pandemic and inflation.
Unfortunately, for many seniors on benefits, the increase hasn’t been enough to cover the economy’s sky-high inflation. As a result, another, higher COLA would be required to help seniors get back on track, CNBC’s Lorie Konish reports.
Greater Inflation, Higher COLA
This year’s 6 percent COLA increase was Social Security’s highest raise ever. The reason it was so high is due to inflation; however, no one expected our current inflation to be so bad. With prices for common goods jumping up 7.9 percent and Medicare costs skyrocketing 14.6 percent, seniors can’t keep up. Because of this, early estimates for 2023’s COLA increase range between 7 and 7.6 percent, exceeding last year’s record.
This remains an estimate, as the Social Security Administration (SSA) won’t conduct a COLA analysis until October. The Fed announced in March, it would issue increase interest rates. The strategy worked in the past and would make borrowing money harder. Slowing the amount of circulated money in an economy will eventually lower prices and deflate the market. A higher COLA would help seniors afford essentials and pad their finances, while these interest rates were in effect.
The average Social Security benefit comes to around $1,564. To keep up with inflated prices, and 8.6 percent increase in retail goods, as shown in the Consumer Price Index for Urban Wage Earners, benefits would need to increase to $1,698.50. Seniors currently need to find other ways to produce the money, like withdrawing from other pensions or going back to work. A higher benefit can help seniors relax and reinvest into the economy.
The Council for Retirement Security’s mission is to protect Social Security so every senior can enjoy retirement. COLA increases are important because they help Social Security do the job it was meant to do, which is help seniors. If a higher COLA can help, then it is worth looking into.