Social Security recipients have long known that they may get the biggest cost of living increase in decades next year, and that remains the case after the latest estimate.
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On Tuesday, The Senior Citizens League (TSCL), a non-party senior advocacy group, projected that the cost-of-living adjustment to social security (COLA) for 2022 will be 6% to 6.1% according to the Consumer Price Index for Urban Wage Workers (CPI-W). This projection falls slightly from the previous month’s estimate of 6.2%, but would still represent the largest increase in COLA since 1982.
The forecast is based on CPI data up to August, according to a TSCL statement. There is still one more month of consumer price data ahead of COLA’s official announcement in October.
“This year is particularly difficult to predict with certainty,” said Mary Johnson, a Social Security League analyst for the Elderly League. “Inflation patterns caused largely due to the COVID-19 pandemic were unprecedented in my experience. Price changes due to climate disasters throw the monkey’s keys over the difficulties of seeing costs accumulate earlier this year. “
Strong increases in COLA usually occur during periods of high inflation. This has not been a big problem in recent years. As previously reported in GOBankingRates, the US economy has been operating at almost zero inflation for most of the last decade. This included the price of gasoline, which the Social Security Administration is closely monitoring.
But this year, gas prices have risen sharply, accounting for much of COLA’s projected increase. However, not everyone agrees with such a strong emphasis on gas prices. Gas prices tend to affect younger consumers more than older ones. As people get older, they tend to spend more on medical and housing costs, which is one of the reasons some advocates want to focus more on those costs when determining COLA increases.
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Regardless of the increase, it is unlikely to greatly affect the amount of money Social Security recipients have at the end of the month. According to The Motley Fool’s financial site, most, if not all, of the additional funds are likely to be devoured by inflation, not only in the form of higher living expenses, but also in terms of higher medical expenses, premiums of Medicare Part B and housing expenses.
More information from GOBankingRates
This article originally appeared on GOBankingRates.com: The projection of the cost of living on social security is slightly reduced, but still historically high