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Inflationary fears worry Social Security recipients about adjusting the cost of living to their monthly checks, but this year could see one of the biggest increases to date.
See: 5 Things Most Americans Don’t Know About Social Security
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Legislation enacted in 1973 allowed cost-of-living adjustments to social security checks to keep pace with inflation. According to the Social Security Administration, the latest COLA is 1.3% for social security benefits and social insurance payments. Social Security increased 1.3% effective December 2020 benefits that were payable in January 2021.
COLA is calculated with a formula specified by the Social Security Act and is based on increases in the Consumer Price Index for urban workers and office workers. This is calculated on a monthly basis by the Bureau of Labor Statistics.
The SSA only adjusts its payments once a year, starting with the December benefits paid in January. This means that beneficiaries would have to wait for the December adjustments to see a further increase in the percentage of COLA payable from January 2022.
The good news is that soaring inflation and relentless prices will likely see a bigger COLA for 2022 than has been seen in decades. An advocacy group is pushing for a 6.1% increase for seniors due to spike in inflation, CBS reports.
The bad news is that seniors will face the meager 1.3% increase for the remainder of 2021 as prices continue not to fall. Inflation climbed 5.4% in June alone, meaning a social security check received in June was worth less than it was the month before.
The Senior Citizens League, one of the largest non-partisan seniors advocacy groups in the country, is one of the groups pushing for higher and more standard COLA rates.
See: Social security: Understanding the basics
Find: The Biggest Problems Facing Social Security
According to their research, social security benefits have lost over 30% of their purchasing power since 2000 largely due to low COLAs and rising health care costs. They are urging Congress to pass legislation that would base COLA on inflation indices specific to the elderly, such as the consumer price index for the elderly. For their part, this type of index regularly places senior spending inflation at two tenths of a percentage point above the CPI-W rate. They state that a senior who applied for benefits over thirty years ago would have received almost $ 14,000 more in retirement if a consumer price index for seniors had been used relative to the urban wage price index that SSA currently uses for COLA increases.
Rising costs could also potentially increase support for the COLA Act to 3%, which pushes for a guaranteed 3% increase in COLA each year.
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This article originally appeared on GOBankingRates.com: Social Security could see COLA’s biggest jump since 1983
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