2022 COLA could be the biggest since 1983
Based on how inflation ran during 2020, Social Security's cost of living adjustment for this year, which began affecting payments in January, was 1.3%. It raised benefit checks by an average $20, according to the nonpartisan advocacy group The Senior Citizens League.
That increase has been gobbled up by price hikes in 2021.
The COLA for 2022 could be far greater — as high as 6.1%, the league says. The size is determined by the government's inflation numbers from the third quarter, meaning July, August and September. The September data is due for release on Wednesday, and that will allow Social Security to make its big announcement.
If the advocates are right, Social Security checks next year will see their biggest increase since 1983, when the COLA was 7.4%.
But the news could be bittersweet. Mary Johnson, the Social Security and Medicare policy analyst at The Senior Citizens League, says some Social Security recipients could see cuts in other benefits because of their larger checks.
“Higher income could lead to trims in food stamps, rental assistance or Medicare Extra Help, which covers most prescription drug costs," Johnson tells Moneywise.
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Group says seniors need a stimulus check too
The Senior Citizens League says older Americans can't want for the larger Social Security COLA to take effect in January. The group is calling on Congress to provide seniors with an immediate income boost — in the form of emergency $1,400 stimulus checks for people on Social Security.
A petition drive launched in early September has already gathered more than 38,000 signatures in favor of a direct payment to help the elderly cope with painful increases in prices.
Those have included a 48% surge in gasoline costs over the last year and a 39% jump in home heating oil, according to research from the senior group.
"We’ve heard from thousands of [seniors] who have exhausted their retirement savings, who have started eating just one meal a day, started cutting their pills in half because they can’t afford their prescription drugs," writes Senior Citizens League chairman Rick Delaney, in a letter sent to every member of Congress.
Though The Senior Citizens League boasts more than a million supporters, there’s a good chance its petition will be ignored by lawmakers, who are focusing on other matters including infrastructure spending and just keeping the government's bills paid.
A different petition calling for regular $2,000 checks for all Americans has drawn more than 2.9 million signatures — but little, if any, attention from Congress.
How Americans can fight back against inflation
A new stimulus check for seniors might very well never happen, and the new Social Security COLA won't arrive for months — and may not go far enough. So while prices are skyrocketing, there are several things all Americans, including seniors, can do to ease some of the budget-battering effects of inflation.
If you’re still making payments on your mortgage, it's a good time to refinance and slash your monthly payment. Thirty-year mortgage rates have slipped below 3% again, and a new loan might easily save you hundreds of dollars per month. Nearly half the homeowners who refinanced over the year that ended in April are now saving at least $300 each month, a Zillow survey found.
When you shop online, take advantage of every bargain, and don't overpay. You might download a handy browser extension that hunts for lower prices and instantly provides the promo codes websites ask for during checkout.
A few wise investments also can help ward off the effects of rising costs.
Investing in farmland can be a good hedge against inflation — because everybody's got to eat, right? New are platforms are helping investors tap into this long-overlooked asset class.
If you've never waded into the stock market, you can start small. A popular app lets you invest in a diversified portfolio using little more than "spare change" from your everyday purchases.
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