Social Security benefits are getting biggest boost in 40 years. Here's why it can't always jump so much each year

Asia's Tech News Daily
Don Bayley | Vetta | Getty Images

This week's announcement of the highest Social Security cost-of-living adjustment since 1982 was welcome news for retirees. It will help alleviate the financial pinch many are feeling.

Beneficiaries in 2022 will receive a 5.9% boost to their checks. That's up from a 1.3% benefit increase for 2021.

Even so, a 5.9% increase will only bring about a $92 increase to the average monthly retirement benefit.

In the past 10 years, the average increase was 1.65%, according to the National Committee to Preserve Social Security and Medicare. In three of the past 12 years, the COLA was zero.

“When you talk to a lot of retirees, they will very quickly complain about, 'Oh, my inflation rate is higher than what the government says it is,'” said James Angel, associate professor of finance at Georgetown University's McDonough School of Business.

Moreover, many notice that what they pay at the grocery store or the doctor's office is going up faster than their Social Security checks, he said.

This year's more generous increase may be a one-off event.

The last time the COLA came close to being this high was in 2009, when there was a 5.8% boost. However, the following two years, the adjustment was zero, meaning beneficiaries saw no benefit increase.

A similar scenario could play out again, Social Security Administration Chief Actuary Stephen Goss said during a webcast hosted by the Bipartisan Policy Center this week.

This year's COLA could be offset by smaller than expected annual adjustments in the future as prices return to normal, he said.

!function(){“use strict”;window.addEventListener(“message”,(function(e){if(void 0!==e.data[“datawrapper-height”]){var t=document.querySelectorAll(“iframe”);for(var a in e.data[“datawrapper-height”])for(var r=0;r

Cost-of-living adjustments are an often overlooked feature of the program that aim to help protect benefits' buying power, said Chantel Boyens, principal policy associate at the Urban Institute.

“This is a benefit that if you tried to buy it in the private market, you would find is really quite costly,” Boyens said.

Yet some like The Senior Citizens League, a non-partisan senior group, have argued that the way the COLA is measured is not keeping up with the rising costs seniors pay.

Social Security benefits have gone up by 55% over the past 21 years, according to The Senior Citizens League, while health-care costs rose by 145% and housing costs went up 118% during that time.

!function(){“use strict”;window.addEventListener(“message”,(function(e){if(void 0!==e.data[“datawrapper-height”]){var t=document.querySelectorAll(“iframe”);for(var a in e.data[“datawrapper-height”])for(var r=0;r

The Social Security Administration currently uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

Proposals have suggested using another measure, the Consumer Price Index for the Elderly, or CPI-E, instead because it may better reflect seniors' costs.

However, the CPI-E does not always grow faster than the CPI-W. In the past 12 months, the CPI-W increased more than the CPI-E, Angel noted.

Other measures, including a chained CPI, have also been suggested. The challenge is finding a measurement that best matches the prices seniors pay.

Notably, any change to the way COLAs are measured would have to be authorized by Congress.

More from Personal Finance:
Why you should pay attention to Medicare open enrollment
Seniors' group calls for $1,400 stimulus checks for Social Security recipients
Here are the changes that could be coming to your Social Security benefits

In the meantime, beneficiaries are poised to see the 5.9% bump to their benefits starting with their January checks.

How large that increase will be will depend on the size of their benefits.

One important way retirement beneficiaries can increase their benefits, and thus also the COLAs they receive every year, is by waiting to claim, Angel said.

By waiting until after age 62, when they first become eligible for retirement benefits, they stand to increase their benefits by 8% per year up to age 70.

That still is the most advantageous strategy, so long as a person is in good health, Angel said. That is true despite the fact that the Social Security trust funds are at risk of becoming depleted in 13 years, he said. If Congress does not do anything to change that by that time, 78% of benefits would still be payable.

“You're still better off waiting because of that inflation adjustment,” Angel said.

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

Sweden's Husqvarna raises sales and profitability targets

FILE PHOTO: A Husqvarna robotic lawn mower is placed in its docking station in the Humlegarden park in Stockholm STOCKHOLM (Reuters) – Husqvarna, the world's biggest maker of power gardening ... Read more »

Scorsese producer to make first Hollywood movie funded by NFTs

Niels Juul hopes to raise up to $10m and says he wants to ‘democratise’ antiquated funding system The executive producer behind blockbusters including Martin Scorsese’s The Irishman is to make ... Read more »

Zero-sugar Oreos see weak China response despite healthy snacking trend

1 / 5Zero-sugar Oreos see weak China response despite healthy snacking trendOreo Zero Sugar Cookies, packaged in white boxes, are seen among a range of Oreo products By Siddharth Cavale ... Read more »

Last-minute bid to stop Shell's oil exploration in whale breeding grounds in South Africa

Photograph: Nic Bothma/EPA Campaigners have filed legal challenge against seismic survey along Eastern Cape province An 11th hour bid has been launched to try to halt plans by Royal Dutch ... Read more »

American Express accused of ‘cutting off' vulnerable customers by ditching cash payments

© Provided by The Telegraph Cash in the bin American Express risks “cutting off” vulnerable cardholders after it announced it would no longer accept cash payments, experts have warned.  The ... Read more »

European stocks seen reaching new records in 2022: Reuters poll

German share price index DAX graph is pictured at the stock exchange in Frankfurt By Julien Ponthus and Danilo Masoni LONDON/MILAN (Reuters) – Uncertainty about the COVID-19 pandemic has not ... Read more »

ANZ faces class action for "unfair" interest charged from credit card customers

FILE PHOTO: A man walks past a branch of the Australia and New Zealand Banking Group Ltd (ANZ) in Sydney (Reuters) – Australia and New Zealand Banking Group has been ... Read more »

Almost £20 billion in lost pensions going unclaimed - how to find out if you're owed money

State pensions were recently announced to be increasing by 3.1% in April, however there’s an estimated £19.4 billion in unclaimed, forgotten or lost pensions in the UK. This means that ... Read more »

China's property woes worsen as home prices slip in November-survey

People ride scooters past residential buildings in Beijing BEIJING (Reuters) – China's property market woes worsened in November, with prices for both new and resale homes falling amid weaker demand ... Read more »

Australia's GDP falls by 1.9% as Covid contraction less severe than feared

Photograph: Lisa Maree Williams/Getty Images Australia’s second economic contraction caused by Covid has been less severe than feared as increased public spending and a swelling trade surplus cushioned a steep ... Read more »

Yen shines, Aussie sags as Powell turns hawk despite Omicron uncertainty

FILE PHOTO: Illustration photo of U.S. dollar and Japan yen notes By Kevin Buckland (Reuters) – The safe-haven yen held steady on Wednesday, while the risk-sensitive Australian dollar languished near ... Read more »

Rapid Irish manufacturing growth slows in November -PMI

A strawberry moon is seen over chimneys at the Guinness factory during sunset in Dublin DUBLIN (Reuters) – Rapid growth in Irish factory activity slowed to its lowest level in ... Read more »

UK homes price rise to cool, but become more unaffordable: Reuters poll

FILE PHOTO: Britain’s house prices boom By Jonathan Cable LONDON (Reuters) – A surge in British property prices is set to ease over the coming years, but homes will become ... Read more »

Universal Credit claimants to receive boost worth £1,000 a year from today

Universal Credit has been altered as a result of announcements made earlier this year in the Budget. It means the taper rate – the amount a person’s Universal Credit is ... Read more »

Zscaler (ZS) Surpasses Q1 Earnings and Revenue Estimates

Zscaler (ZS) came out with quarterly earnings of $0.14 per share, beating the Zacks Consensus Estimate of $0.12 per share. This compares to earnings of $0.14 per share a year ... Read more »

Broadcom Inc. (AVGO) Stock Moves -1.89%: What You Should Know

In the latest trading session, Broadcom Inc. (AVGO) closed at $553.68, marking a -1.89% move from the previous day. This change was narrower than the S&P 500’s 1.9% loss on ... Read more »

UnitedHealth Group (UNH) Stock Moves -1.72%: What You Should Know

UnitedHealth Group (UNH) closed the most recent trading day at $444.22, moving -1.72% from the previous trading session. This move was narrower than the S&P 500’s daily loss of 1.9%. ... Read more »

Powell Vows to Speed-Up Taper, Market Falls

The spark and flame from news reports ahead of today’s opening bell regarding uncertainty in treating the new Omicron variant of Covid-19 turned into a bonfire upon Fed Chair Jay ... Read more »

NetApp (NTAP) Beats Q2 Earnings and Revenue Estimates

NetApp (NTAP) came out with quarterly earnings of $1.28 per share, beating the Zacks Consensus Estimate of $1.22 per share. This compares to earnings of $1.05 per share a year ... Read more »

Lululemon (LULU) Dips More Than Broader Markets: What You Should Know

Lululemon (LULU) closed at $454.41 in the latest trading session, marking a -1.91% move from the prior day. This move lagged the S&P 500’s daily loss of 1.9%. Elsewhere, the ... Read more »

Let the ‘Out-the-Door Price' Drive Your Next Car Negotiation

Buying a vehicle is more difficult than ever. NerdWallet – NerdWallet Shoppers have long been accustomed to negotiating discounts from the figure on the window sticker. In today’s shortage-driven market, ... Read more »

Hertz Global (HTZ) Stock Gains on Share Repurchase Program

Hertz Global Holdings HTZ, which completed its Chapter 11 restructuring process in June this year, unveiled a large stock repurchase program. The move is in line with its efforts to ... Read more »

Goldman Sachs (GS) Stock Moves -1.44%: What You Should Know

In the latest trading session, Goldman Sachs (GS) closed at $380.99, marking a -1.44% move from the previous day. This change was narrower than the S&P 500’s 1.9% loss on ... Read more »

Northern Trust (NTRS) Fortifies Relationship With Pendal

Northern Trust NTRS expanded its relationship with Pendal Group Limited and will now offer a broad spectrum of asset services to the latter in the United Kingdom, Ireland and Australia. ... Read more »

IBM (IBM) Stock Moves -1.18%: What You Should Know

In the latest trading session, IBM (IBM) closed at $117.10, marking a -1.18% move from the previous day. This change was narrower than the S&P 500’s daily loss of 1.9%. ... Read more »

3 Stocks to Buy at Big Discounts in December and Beyond

– Zacks Today’s episode of Full Court Finance at Zacks quickly dives into the recent market pullback to end November. The focus then shifts to Darden Restaurants DRI, Tempur Sealy ... Read more »

2 Retail Stocks to Avoid After Black Friday Traffic Disappoints

Black Friday sales reflected lingering supply chain issues and lower foot traffic due to concerns over the newly identified omicron coronavirus variant. Hence it could be best to avoid retail ... Read more »

Hewlett Packard Enterprise (HPE) Beats Q4 Earnings Estimates

Hewlett Packard Enterprise (HPE) came out with quarterly earnings of $0.52 per share, beating the Zacks Consensus Estimate of $0.49 per share. This compares to earnings of $0.37 per share ... Read more »

JPMorgan Chase & Co. (JPM) Stock Moves -1.49%: What You Should Know

JPMorgan Chase & Co. (JPM) closed at $158.83 in the latest trading session, marking a -1.49% move from the prior day. This change was narrower than the S&P 500’s 1.9% ... Read more »

‘Cashback at the till' service being rolled out to more than 2,000 shops

A scheme enabling people to get cash from retailers’ tills without needing to make a purchase is to be rolled out to more than 2,000 shops before the end of ... Read more »

ESG Book aims to 'disrupt' sustainability sector with free data

FILE PHOTO: A leaf sits on top of a pile of coal in Youngstown, Ohio By Huw Jones LONDON (Reuters) – HSBC, Deutsche Bank and Swiss Re have thrown their ... Read more »

UK's Rightmove forecasts 5% rise in property prices for 2022

Estate Agent’s boards are lined up outside a housing development in Manchester LONDON (Reuters) – Asking prices for British residential property are likely to rise by 5% next year, but ... Read more »

UK retailers raise shop prices for first time since 2019

Britain’s Black Friday in London LONDON (Reuters) – British retailers increased their prices for the first time in more than two years in November as the coronavirus pandemic hit global ... Read more »

Property: The pros and cons of building your own home

All new homes must meet building regulations so a building inspector will visit the site at key points to ensure everything is being done safely and complies with planning regulations. ... Read more »

Non-fungible tokens take No 1 spot in influential art world power list

The non-fungible token or NFT has taken the No 1 spot in the annual ranking of the contemporary art world’s most influential movers and shakers – marking the first time ... Read more »

UK high street price rises hit Christmas shopping in cost of living squeeze

Shoppers may see a price squeeze in the UK this year. Photo: Mike Kemp/In Pictures via Getty Prices crept up in November for the first time since May 2019, as ... Read more »

Pulling the switch: how to find a new clean energy provider in Australia

Since multinational energy giant Royal Dutch Shell expanded into Australia’s residential electricity market by purchasing our greenest power company, Powershop Australia, many of Powershop’s 185,000 customers have apparently considered jumping ... Read more »

Switch without a Hitch: Now's the time to bag a cheaper equity release deal before rates rocket

© Provided by This Is Money MailOnline logo Homeowners are running out of time to save thousands by switching to a cheaper equity release deal as rock-bottom rates begin to ... Read more »

Microsoft shareholders back proposal seeking report on harassment

FILE PHOTO: A Microsoft logo is seen in Los Angeles (Reuters) – Microsoft Corp said on Tuesday its shareholders had approved a proposal by Arjuna Capital, which sought a report ... Read more »

Designer Brands (DBI) Reports Next Week: Wall Street Expects Earnings Growth

Wall Street expects a year-over-year increase in earnings on higher revenues when Designer Brands (DBI) reports results for the quarter ended October 2021. While this widely-known consensus outlook is important ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic