Fixed incomes, tight savings, and ramped up inflation have all forced seniors between a rock and a hard place. The Social Security Administration’s cost-of-living-adjustment (COLA) increased benefits by almost 6 percent, however, seniors are still facing financial trouble. From what we understand, 2023’s COLA could bump benefits up by an estimated 8 percent, — the largest hike since 1981.
But CNBC’s Lorie Konish reports on why a bigger COLA might not be best scenario for Social Security beneficiaries old and new.
A Bigger COLA
When it comes to finances, it can be hard at first to see the big picture. A larger COLA would be a benefit to the seniors currently on benefits, helping a lot of people out of a rough spot. However, it’s imperative to plan for the short and long term when dealing with retirement and Social Security. A bigger benefit bump today might mean an insolvent Social Security trust tomorrow.
This is after the Treasury announced that the program would be funded for a year longer than expected; yet that analysis didn’t account for potential COLA and inflation hikes. Granted, we still don’t know the actual COLA for 2023, the determining factor will be inflation. A smaller COLA would still increase benefits and slow the rate of insolvency.
Having Our Cake
The only way we can have our cake and eat it too is for Congress to act to protect the Social Security Trust. Now is the time. If we move to protect the program from becoming insolvent, we don’t have to worry about the rate of inflation or the size of our benefit.
Follow the Council for Retirement Security, and join us in demanding that Congress act now to protect the program. So, we can enjoy a bump in our benefits without having to feel responsible for the program into which we have paid.