Millions of retirees depend on Social Security to make ends meet. The way inflation is affecting seniors' budgets may make that hold true.
Some of the changes that Social Security undergoes can help the elderly. October is a good time to announce a change that could be essential to seniors' financial stability.
The purpose of the cost of living adjustment is to help seniors maintain their buying power in the face of inflation. Social Security benefits went up in response to inflation. It's reasonable to assume that next year's COLA will be even more significant as living costs have gone up even more.
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Seniors will have to wait until October to find out what their COLA will be. Why did it happen?
The third-quarter data from the Consumer Price Index for Urban Wageearners and Clerical Workers is used to calculate the COLA. Key goods and services are measured on a year-over-year basis. Since COLAs are supposed to help seniors keep up with inflation, it makes sense that they'd be pegged to an index that measures just that.
The problem with theCPI-W is that it doesn't reflect costs specific to seniors Retirees may not spend as much money on gas as workers due to the fact that they don't have jobs to commute to. Many advocates want to change the way Social Security COLAs are calculated and use a more senior-specific index.
Data from the year's third quarter is how next year's COLA will be established, but for now, the tool of choice is the CPI-W. Seniors will have to wait until October to find out what sort of raise they'll get in 2023.
Social Security beneficiaries are hoping for a big increase in their benefits. Large COLAs are indicative of the fact that living costs have gone out of control.
The best thing that can be done to help seniors keep up with inflation is a raise. They won't be helped by it or gain a lot of buying power. It's always a good idea to have income sources outside of Social Security.
Seniors have nest eggs that can be tapped. Even if the COLA is the largest in decades, those who don't might not be able to make ends meet.
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