From groceries to gasoline, the price of goods seems to be steadily increasing. While inflation is usually considered a bad thing, it could, however, work to the benefit of seniors in the near future.
Each year, seniors who receive Social Security benefits are eligible for a cost-of-living adjustment (also called COLA), which is, in turn, calculated based on the data from the CPI-W or the Consumer Price Index for Urban Wage Earners and Clerical Workers.
The CPI-W measures fluctuations in the cost of common services and goods. This means when prices are on the rise and the CPI-W increases, seniors receiving Social Security benefits are provided a raise. Conversely, when the CPI-W stays flat or reduces, seniors could be denied a COLA.
Over the last few months, we’ve seen inflation increase to a point where many people were hit with higher prices at the supermarket and the pump. If that trend continues, it is likely that American seniors will receive a big raise in terms of their Social Security benefits for 2022.
That said, one thing to keep in mind is that the cost-of-living adjustment is calculated based on third-quarter data from the CPI-W, meaning if inflation starts to lower during the summer, it could impact the raise that seniors will receive. But if the last few months are anything to go by, it appears that seniors will receive a fairly decent increase to their benefits.
This is likely to come as welcome news to seniors, given that COLAs, over the last few years, have been pretty insignificant due to the minimal movement in the CPI-W. In 2021, seniors only got a 1.3% increase in Social Security benefits. The year before that, they received an increase of just 1.6%.