It is no secret that Social Security is poorly capitalized, and many Americans struggle to get through their monthly income controls. Here are the recent abouts and happenings with COLA!
Inflation problem in America
Americans are confronted with the bitter reality of rising inflation. Consumer prices increased by 0.6 per cent in May, bringing the year-to-date inflation rate to 5%. It is the speediest rate of growth since August 2008, and it demonstrates the influence of steeply growing demands as consumers continue dining, shopping, and travelling as the economy reopens.
Some food manufacturers and grocers resort to “shrinkflation,” which involves packaging food in smaller containers while charging the same price to manage shoppers’ standards. And it’s not just food prices that are rising. Last month, used car prices increased by more than 7%, while household furnishings and airfares also increased.
All while senior citizens are caught among skyrocketing costs and a cost-of-living increase that isn’t struggling to keep up until around 2021. The Social Security Administration, which adapts disbursements for the following year each fall, increased payments for 2021 by 1.3 per cent. It means that Social Security checks aren’t coordinating with the price increases that have hit people’s pockets this year.
What is COLA?
The COLA increase in social security is derived from the CSP (CPI-W), measured between the fourth quarter of 2019 and the 3rd quarter of 2020, which shows muted inflation. The COLA increase is based on a consumption price index. The average beneficiary receives $20 more a month, from $1.523 to $1.543.
This year, senior citizens’ double-digit prices went up, according to data compiled by the League, in expenditure groups such as car and truck rentals, gasoline, fuel oil, beef, and pork roasting. The Social Security Administration announced a 1.3 percent hike for 70 million Americans regarding social security and supplemental security income about the cost of adaptation (COLA), which represents an increase in social security benefits against inflation.
Seniors and disabled citizens rely heavily on Social Security benefits for a significant portion of their income, and it is past time for Social Security benefits to reflect their lifestyles. Using a COLA that reflects how retirees spend their money – particularly in health care – is a no-brainer that will increase benefits and make Social Security work better for those who rely on it.
The “Fair COLA For Seniors Act of 2021,” introduced by U.S. Rep. John Garamendi, D-Walnut Grove, would require Social Security to use the Consumer Price Index for the Elderly to calculate a more equitable cost of living adjustment for seniors.
It would increase benefits and guarantee that Social Security cost-of-living adjustments reflect the actual rising costs for seniors and disabled Americans. Garamendi was one of 23 people who signed on to the bill. Except for Republican Rep. Brian Fitzpatrick of Pennsylvania, all of the sponsors are Democrats. According to the release, the Consumer Price Index for the Elderly rose at an annual average rate of 3.1 percent from 1982 to 2011, compared to 2.9 percent for the current methods. Garamendi was applauded for initiating this step of challenging the legislation.
Must Check: The social security cost of living: Updated news
Inflation protection is among the most impressive attributes of Social Security. However, the prevailing way of estimating inflation understates the cost of living for seniors and people with disabilities, who are disproportionately burdened by soaring prescription drugs and other essential medical care costs. This legislation better prohibits the scouring of Social Security’s modest but vital earned benefits over time by far more precisely accounting for the costs borne by Social Security beneficiaries.
The 2022 adjustment could reach 5.3%, up from 1.3% by 2021. It would be a significant upsurge. This increase was estimated at 5.8% by the Non-Party Senior Citizens League based on the Consumer Price Index Office of Labor Statistics since 2009.
The latest update in 2021 about Social security cost of living adjustment
The actual level of growth depends on the economy and if the Federal Reserve decides to increase interest rates. With the increase starting January 1, 2022, the final decision will be made at the end of the fiscal year.