For the past several months, data have signaled that the consumer price index—the primary indicator of inflation in the United States—has been steadily on an upward trend.
In fact, just this week, the inflation measure the Federal Reserve relies on to set future policy climbed 3.6 percent in July compared to last year—which tied the highest level seen in roughly thirty years.
With these inflationary concerns in mind and the numbers continue on their current trajectory, millions of seniors across the country have expressed frustration that their dollars just won’t stretch that far these days—with some, in extreme cases, even being forced to choose between food or medical care.
There is, though, a high likelihood that help will soon arrive, as the Social Security program’s cost of living adjustment (COLA) for next year is expected to receive a sizeable boost. According to the Senior Citizens League, a nonpartisan senior group, that boost could amount to a 6.2 percent cost-of-living adjustment—the largest raise seen in nearly four decades.
Despite that potentially robust bump in Social Security payouts, one expert from the finance website the Motley Fool has suggested that Medicare premiums could rise as well and eat into those higher monthly checks.
“Medicare Part A, which covers hospital care, is generally free for enrolled seniors. But Part B, which covers outpatient and diagnostic services, charges enrollees a monthly premium that changes on a yearly basis,” she wrote.
“Right now, the standard Part B premium is $148.50. Higher earners, however, pay more for Part B. And because we don’t yet know what Part B premiums are going to look like in 2022, it’s hard to predict how much of their upcoming COLA seniors will actually manage to keep. In recent years, Medicare Part B premium hikes have outpaced COLAs. In fact, between 2000 and 2020, COLAs averaged 2.2 percent, while Part B premiums rose by 5.9 percent,” she continued.
COLA a ‘Mixed Bag’
It has been well-documented that many seniors only have moderate levels of savings that they can tap into, which could pose problems if the benefit adjustment isn’t headed directly into the pockets of the retirees.
According to the Social Security Administration, approximately 20 percent of married couples and 40 percent of singles receive at least 90 percent of their income from the Social Security program.
“The whole reason 2022’s COLA is looking to be larger is that the cost of common goods and services has recently gone up—a lot. And so seniors need a higher benefit to keep up with rising food costs and other expenses,” the expert contends.
“In fact, next year’s COLA may really turn out to be a mixed bag. While getting a raise is always a nice thing, the reason behind that raise could render that boost highly ineffective, as could a large jump in the cost of coverage under Medicare,” she added.
Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.