Posted on 10/12/2022 12:02:16 PM PDT by Red Badger
'With many older people choosing to live in suburban areas or rural areas, some will benefit more...'
(Headline USA) On Thursday, the U.S. government is set to announce how big a percentage increase Social Security beneficiaries will see in monthly payments this upcoming year.
Some estimates say the boost for more than 65 million Social Security beneficiaries may be as big as 9%.
It’s virtually certain to be the largest raise in four decades and will add more strain on the welfare program’s trust fund, which is expected to expire within the next decade, even as younger taxpayers continue to invest money into the system that they are unlikely ever to see paid out.
The latest annual trustees report for Social Security said its trust funds that pay out retirement and survivors and disability benefits will be able to pay scheduled benefits on a timely basis until 2035. After that, incoming cash from taxes will be enough to pay 80% of scheduled benefits.
This year’s boost also is likely to fuel even more inflation, even as the Federal Reserve has aggressively begun hiking interest rates to offset the existing inflation caused by Democrats’ reckless spending sprees.
The increase is one-size-fits-all, which means beneficiaries get the same raise regardless of where they live or how big a nest egg they may have.
They’re also permanent, and they compound. That means the following year’s percentage increase, whatever it ends up being, will be on top of the new, larger payment beneficiaries get after this most recent raise.
Like the inflation that the increase is intended to address, the new cost-of-living adjustment may be the highest since 1981, when Social Security payments went up by 11.2%.
Automatic annual cost-of-living adjustments didn’t begin for Social Security until 1975, after a law passed in 1972 requiring them.
Last year’s increase of 5.9% was itself the biggest in nearly four decades.
Since 2000, it’s averaged 2.3% as inflation remained remarkably tame through all kinds of economic swings. Since the 2008 financial crisis, the U.S. government has announced zero increases to Social Security benefits three times because inflation was so weak.
Critics, however, say the data the government uses to set the increase doesn’t reflect what older Americans are actually spending, and thus the inflation they’re actually feeling.
The COLA adjustment is tied to a measure of inflation called the CPI-W index, which tracks what kinds of prices are being paid by urban wage earners and clerical workers.
More specifically, the increase is based on how much the CPI-W increases from the summer of one year to the next.
People generally pay more attention to a much broader measure of inflation, the CPI-U index, which covers all urban consumers. That covers 93% of the total U.S. population.
The CPI-W, meanwhile, covers only about 29% of the U.S. population. It has been around longer than the CPI-U, which the government began compiling only after the legislation that required Social Security’s annual increases be linked to inflation.
Some critics have argued for years that Social Security should change to a different measure, one that’s pegged to older people in particular.
Another experimental index, called CPI-E, is supposed to offer a better reflection of how Americans aged 62 and above spend their money. It has historically shown higher rates of inflation for older Americans than the CPI-U or CPI-W, but it has not taken hold. Neither have other measures compiled by organizations outside the government that hope to show how inflation affects older Americans specifically.
Recently, the CPI-E has shown a bit milder inflation than CPI-W or CPI-U.
To calculate the CPI-E, the government pulls from the same survey data used to measure the broad CPI-U. But there are relatively few older households in that data set, meaning it may not be the most accurate.
All indexes give just a rough approximation of what inflation really is. But the more pressing challenge may be that if the government switched to a different index, one that showed higher inflation for older Americans, Social Security would have to pay out higher benefits.
That in turn would mean a faster drain on Social Security’s trust fund, which looks to run empty in a little more than a decade at its current pace.
Through a complicated formula that takes into account several factors, including how much a worker made in their 35 highest-earning years. Generally, those who made more money and those who wait longer to start getting Social Security get larger benefits, up to a point.
This year, the maximum allowed benefit for someone who retired at full retirement age is $3,345 monthly.
“The COLA doesn’t take into account where you live or your actual spending patterns,” said William Arnone, CEO of the National Academy of Social Insurance.
“For some people, it’s an overstatement of cost of living for, say, small towns in the Midwest versus urban areas like New York, D.C. or Chicago,” he continued. “With many older people choosing to live in suburban areas or rural areas, some will benefit more” than others from the same-sized increase.
it's a vicious cycle, but social security recipients receive raises ONLY AFTER INFLATION HAS ALREADY BEEN RAGING. Any rise they MAY receive is only a very small drop in the bucket. If you want to slow down or stop inflation, you have to tackle the socialists give-away programs first.
Does not seem right that the % increase in SNAP payments will be higher that the social security % increase.
I’m on social security and it sure doesn’t feel like I’ve been pandered too. I worked for 47 years so just maybe I should get something back. And, since Biden’s policies have erased about 20% of my investments.
Sounds like a normal inflation increase to me in a year of abnormal inflation.
Seriously, why are people on Freerepublic complaining that Social Security is tied to the inflation rate? Do you want Social Security recipients to fall behind? Do you want the Democrats to be able to honestly say the GOP favors cutting Social Security? (Not keeping pace with inflation would be a cut)
Unfortunately, Republicans like Lindsey Graham really are calling for Social Security cuts. But many of them at the same time want MORE money for Ukraine.
And they also want their own federal pensions to keep pace with inflation. Please, don’t be sheeple for Lindsey Graham Republicans and the Koch-funded libertarian think tanks that give them cover by putting out white papers against Social Security
The political class has a secure retirement. Don’t let them deny you one by cutting your Social Security while helicopteringvdollars onto Ukraine.
Funny how their is never any talk about running out of money for War or Welfare.
Just Social Security.
Humana part D has been most reasonable in my part of TX.
Or teachers' pay. Or unionized government workers pay.
I understand the kickback here but it (the increase) is not an intentional one by him as some magnanimous gesture. Rather, SS COLA is tied to is tied to inflation rates by law. If anything, such a potential increase is a testament to massive incompetence of this fraudulent administration. Frankly, Biden would have kept that increase and given it to Zelensky if he could have. Biden doesn’t give a crap about seniors.
I got news for Brandon......giving us a raise isn’t going to make me vote for him.....good try though.
Thank you! Will check it out.
Same thing as welfare.
This is the problem with the Administrative State. The president and executive bureaucracy can do things like this. Its driving the country into third world status so the Dems can try to win re-election.
It’s time to get those slacker college punks to work supporting the elderly...maybe raise the FICA tax a few points...they’ll just piss it away on booze, drugs, and tranny surgeries.
Are you saying you oppose giving Social Security recipients an inflation adjustment?
Don't forget tats.
He just gave himself a big raise.
Laplata, for what it’s worth, I read a report the other
day that stated Medicare premiums might remain flat or
even drop a little.
I don’t recall where I read it, but it didn’t see to be
a fly by night internet site.
I’m also interested in how those premiums are going to be
changing.
Exactly.
Ukraine just asked for another $57 billion for next year.
Of course, Biden and Congress will grant that plea.
An egregious oversight on my part...mea culpa.
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