News reports say the upcoming cost of living adjustment (COLA) for Social Security could be “huge,” but the Senior Citizens League says it will still be unfair to seniors and not enough to compensate for their actual increased expenses.
“My COLA estimate has dropped to 8.7% almost a full percentage point from the 9.6% that I forecast last month. That was a significant drop, but the Consumer Price Index, CPI-W (CPI-W), the index that Social Security benefits are based on, has decreased even [more] —by 1.10 percentage point year over year to 8.7%,” noted Mary Johnson, Social Security and Medicare analyst for the League.
In response to Johnson’s above announcement,“ one respondent noted the “progressive LOSS OF BUYING POWER OF 40% despite SS COLA from 2000 and … 10% from 2021-2022 alone. This means we have lost (almost) half our real income in face of COLAs. Clearly COLAs are SERIOUSLY INSUFFICIENT and many poor seniors as I who depend ONLY on SS (100% in my case) will financially drown.”
Although an increase of 8.7% would be the highest by far in decades and the most anyone alive would have ever received, the method that the Social Security Administration (SSA) uses to calculate COLA allegedly does not accurately reflect the spending patterns of seniors, which can be quite different than the working-age population.
The average monthly benefit seniors are receiving in 2022 is $1,657 following a COLA bump of 5.9% in January, according to the SSA. A further 8.7% adjustment would add $144 in 2023 and move the average to $1,801 per month. This amount applies both to seniors and those receiving disability benefits under the social security program.
The projected cost-of-living adjustment, or COLA, for 2023 is 9.6%, according to the Senior Citizens League. That bump would raise the average retiree benefit of $1,656 by $158.98, according to the organization. Keep up with inflation? pic.twitter.com/NGJ9CIrVtb
— Rico Johnson (@riconcc5) October 8, 2022
The SSA calculates COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is in turn calculated by the U.S. Bureau of Labor Statistics each month. Federal law stipulates that the COLA increase be based upon “the CPI-W increase from the average for the third quarter of the current year to the average for the third quarter of the last year in which a COLA became effective,” according to the SSA.
“One of the biggest issues in using the CPI-W to calculate the Social Security COLA is the fact that it does not track the spending of retired households age 62 and up and gives greater weight to gasoline and transportation costs,” noted Johnson. “A significant drop in gasoline prices played an outsized role in why my COLA estimate has dropped. It’s important that the public understand that to fight inflation the Administration temporarily lifted the 18.3 cents per gallon federal tax on gasoline for 90 days. That period started in July and ends in September, the SAME third quarter period that is used to calculate the COLA.”
The proportion of income spent on healthcare, food, and housing is higher for seniors and the disabled than the general population, while spending on gasoline is lower, according to Johnson. “Over the past 12 months, they rank food costs as their fastest growing expenditure, housing, and transportation in that order.”
No thanks to democrats. With the CPI for August now available, the nonprofit Senior Citizens League has predicted a COLA increase of 8.7%. That’s more modest than its claim of 10% earlier in the year, but would still be the highest since 1981, when the COLA was 11.2%. pic.twitter.com/pzI23hpO8d
— David I (@dinkyMD) October 10, 2022
The U.S. Bureau of Labor Statistics noted that “increases in shelter, food and medical care were the largest of many contributors” to the August CPI-W increase. But according to the League, those three costs are not given proper weighting for seniors and disabled Americans, resulting in a perennial and progressive loss of purchasing power.
“Based on inflation through August, we calculate that the COLA for August 2022 has fallen short on average by 48%. A $1,656 benefit is short about $43.80 per month on average and by a total of $417.60 year to date,” noted the League.
The Senior Citizens League is taking polls on its website on whether a person supports a temporary two-year suspension on the federal taxation of Social Security benefits to help address unexpected bills, and whether Congress should authorize a $1,400 stimulus check for Social Security recipients.
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