It’s been reported in recent months that Social Security recipients are looking at getting a major cost-of-living allowance (COLA) adjustment in early 2022. This is due to rising inflation, to which the COLA calculation is pegged (or more broadly, to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.)
While the official announcement of the number is still a ways off, the Senior Citizens League said in August that they expect a 6.2 percent cost-of-living adjustment, which would be the largest raise in that measure since the early 1980s.
“The estimate is significant because the COLA is based on the average of the July, August, and September CPI data,” Mary Johnson, a Social Security policy analyst for the Senior Citizens League, said in a statement at the time. “With one-third of the data needed to calculate the COLA already in, it increasingly appears that the COLA for 2022 will be the highest-paid since 1983 when it was 7.4 percent.”
This week, Motley Fool looked at what it described as the “grim reality” of this year’s COLA raise- which is that the higher costs from inflation will likely “gobble up” much of the gains.
“In the case of Social Security, only the CPI-W readings from the third quarter (Q3), July through September, are used to determine the following year’s COLA. While the other nine months can help identify trends, they have no bearing on the announced COLA. If the average CPI-W reading from Q3 in the current year is higher than the average CPI-W reading from Q3 of the previous year, beneficiaries will receive a raise commensurate with the percentage increase, rounded to the nearest tenth of a percent,:” the Motley Fool piece said.
That’s not great news for recipients of the program.
“For the average retired worker, who’s expected to be receiving $1,568 a month by December, a 6% COLA would translate to a $94 monthly bump-up in payout,” Fool said.
“The last time Social Security recipients saw a COLA of 6% or higher was all the way back in 1983, when the COLA passed along for that year was 7.4%. Unless you were netting a payout from Social Security 39 years ago, this should be the biggest raise ever for its 65 million-plus recipients.
But there’s a catch…. The grim reality is that most of the program’s recipients aren’t going to see much or any of this increase, as higher prices for a variety of goods and services eat up their payout boost.”
The official COLA announcement is scheduled for this October.
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.