Americans who receive Social Security benefits will see a big boost in their payments. Like every other year, they’re benefiting from Cost of Living Adjustment. However, this year’s COLA is the biggest one in over thirty-five years.
Since 2021, we’ve seen major inflation pretty much across the board. Additionally, supply chain issues are driving prices higher. As a result, consumers are paying more at the register than they were in previous years. Inflation isn’t new. In fact, we see some measure of inflation every year. However, it is much higher than normal. That’s why this year’s Cost of Living Adjustment is so large.
The Social Security Administration bases its annual Cost of Living Adjustment on a one-year increase in inflation. In the last year, the consumer price index climbed 6.8%, an unusually high increase. Food alone has risen 6.1% in cost over the past year. Gas, on the other hand, has gone up a whopping 58.1%.
According to a CNN report, Social Security recipients will see a Cost of Living Adjustment of 5.9%. That is the highest COLA since 1982. As a result, beneficiaries’ checks from the Social Security Administration will be $92 more than last year. That brings retirement, disability, and other benefits to an average of $1,657 per month. To put things into perspective, 2021’s COLA was only 1.3% which added about $20 per check.
The Cost of Living Adjustment Barely Balances the Scales
This year, the Cost of Living Adjustment sounds big. An extra $92 every month sounds great. That is until you think about how much more things cost this year than they did in the past. Whether it is due to inflation or supply chain issues, prices are on the rise. So, that extra money every month won’t go very far. In fact, Social Security beneficiaries may still find it incredibly difficult to make ends meet, even with the COLA.
It isn’t only the massive amount of inflation and supply chain issues that make the Cost of Living Adjustment less impressive. You also have to take into account who receives the benefits. Right now, an estimated seventy million Americans get monthly Social Security checks. Some of those people are retired. Others are disabled. Some recipients are getting survivor’s benefits from a loved one who passed on. No matter which category they fall under, these checks are the only source of income for many recipients. As a result, the extra money that comes from this year’s COLA will have to fill in the gaps at the gas pump, the grocery store, and when it comes time to pay rent.
In short, the Cost of Living Adjustment helps the Social Security Administration adjust its benefits so recipients can keep their heads above water. However, it doesn’t do much more than that.