In 2020 Social Security recipients saw a 1.3% increase in benefits. Now, the Cost Of Living Adjustment for 2021, which would take effect on January 1, 2022 could be over 6%. That’s an increase of nearly $100 for the average recipient of Social Security.
The Senior Citizen League reported that it expected the increase to be more than $90 per month – bringing the total average Social Security benefit to $1,652. The final decision on a COLA increase for seniors receiving Social Security benefits comes during the month of October. It’s based on a number of factors, but mostly inflation.
The rate of inflation has been closely scrutinized over the last several months – as recovery from the coronavirus pandemic and stimulus checks issued in 2020 and early-2021 prompted heftier spending, despite overall underperformance in the economy. In the past, things like cheap gasoline prices have dragged down COLA increases.
What’s the problem with Social Security’s big COLA increase?
Seniors will see more money in monthly Social Security benefits, but costs will also be higher. The reason for the major COLA increase is due to inflation and rising costs in the current economy.
Here’s another big issue: The purchasing power of Social Security income has declined by 30% since 2000. While an increase of $100 is significant, it will only equate to roughly $70 worth of buying power in the economy.
Social Security is facing an existential crisis over the next decade. – The latest estimates from the fund’s board of trustees says it will run out of reserves by 2033 or 2034.
What are seniors saying about Social Security’s COLA increase?
Many retirees are taking the entire situation day-by-day. “Nothing is promised,” Jane Lebinski told FingerLakes1.com. The 78-year-old has been collecting Social Security for more than a decade – and before retiring – wondered if the program would last much longer. “We’ve been hearing the warnings for years. The increase is going to be nice, but for seniors that rely on that income as their primary source – the boost won’t be enough.”
Advocates say the poorest seniors in the U.S. will need significantly greater boosts than can be provided in a one-time COLA increase. Even if the 6% threshold is reached – it will represent the single biggest jump since 1983, which reflects how out-of-sync the program is with economic reality.
FingerLakes1.com is the region’s leading all-digital news publication. The company was founded in 1998 and has been keeping residents informed for more than two decades. Have a lead? Send it to [email protected].