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On Social Security? You Might Be Getting a Big Raise This Year.

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Image: Creative Commons.

The approaching end of the coronavirus pandemic has brought about something the U.S. economy hadn’t experienced in quite a while: Fears of inflation.

The new Consumer Price Index was released this week, with the overall CPI rising 5.4 percent in June. This was higher than expected, and the biggest monthly gain since August of 2008. More than one-third of the increase was taken up by the category of used cars and trucks.

“What this really shows is inflation pressures remain more acute than appreciated and are going to be with us for a longer period,” Sarah House, senior economist for Wells Fargo, told CNBC. “WE are seeing areas where there’s going to be ongoing inflation pressure even after we get past some of those acute price hikes in a handful of sectors.”

CNBC attributed the rising inflation to factors including supply-chain bottlenecks, rising demand, and year-over-year comparisons to the struggling pandemic economy in the middle of 2020. Fed Chairman Jerome Powell is set to answer questions about inflation, and what the Federal Reserve plans to do about it when he testifies before both houses of Congress later this week.

Most people don’t like inflation, because it leads to paying more money for the same goods. However, there is one group of Americans who stand to benefit from inflation: Social Security recipients.

CBS News reported this week that the 69 million Social Security recipients in the U.S. are expected to get the largest cost-of-living adjustment in nearly 30 years. In fact, one group expects that benefits will rise 6.1 percent.

However, the hike won’t come immediately, as the cost-of-living adjustment won’t kick in until January of 2022. And if inflation dissipates before then, the hike won’t be as large as it looks now. That adjustment will be announced in October.

The COLA increase in 1983 was 7.4 percent, and the Senior Citizens League is predicting that the number next year will be the largest adjustment since then.

“This is the highest COLA I’ve ever estimated in my 26-plus years of researching the annual inflation adjustment,” Mary Johnson, the Social Security and Medicare analyst for the Senior Citizens League, told ThinkAdviser this week. “While the [COLA] adjustment is high and will come as a welcome boost, retirees are trying to cope with soaring inflation right no wwith only a 1.3 percent boost to their benefit this year.”

Recommended: Could Social Security Run Out of Money?

“The big concern is that current high inflation gets built into customers’ and business’ expectations, leading to higher long-run inflation, as happened in the 1970s,” chief economist Gus Faucher of PNC Financial Services Group said in a recent note that was cited by CBS.

Stimulus Check

President Joe Biden signs a bill, S. 579, to make a technical correction to the ALS Disability Insurance Access Act of 2019 which retroactively gives access to Social Security disability benefits for individuals with ALS Tuesday, March 23, 2021, in the Oval Office of the White House. (Official White House Photo by Adam Schultz)

 Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Written By

Stephen Silver is a journalist, essayist, and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review, and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

3 Comments

3 Comments

  1. Ethel Fontenot

    July 15, 2021 at 9:41 am

    Medicare costs rise and absorbs the s.s. raise….sometimes causing one to lose money.

  2. Wayne RH

    July 15, 2021 at 5:51 pm

    How is it a benefit to receive a post-inflation increase that doesn’t cover actual cost of living increases. At best the difference of actual living monies vs. expense is a net loss. Every time.
    “However, there is one group of Americans who stand to benefit from inflation: Social Security recipients.”
    Most recipients have savings from which they maintain their standard of living. Inflation and the current political behavior destroy savings while supporting the irresponsible and unfortunate, such as being paid to not return to work.
    Since 69 million receive Social Security, pretending our country’s current circumstances are benefiting SSA recipients is, I believe the term is “Gaslighting”. Like hypocrisy, not nearly a strong enough word for the actual behavior being described. Evil seems harsh, but perhaps a good modifier?

  3. D. Smith

    July 15, 2021 at 6:37 pm

    Exactly who is going to pay for this increase and how?

    It’s the craziest thing I’ve ever heard. But then, this is the buddin’biden administration making all kinds of promises they know they can’t or won’t be able to keep.

    Eyes wide open, folks. Eye on the ball. Money (cash money) is about to tank. Invest in gold and silver because that’s all there is that will be worth diddly poooooooo in a very short time. Mark my words.

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