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.
Let’s go Brandon!
My Cigna Part G went up just over $14/mo and they did away with the Part D plan I had which I was paying$30/mo and are offering me a plan for $63/mo (more than double what it was). I’ll be looking for new Part D plan...
sigh
“Biden panders...”?
So Joe personally determined what the yearly increase in Social Security will be?
My guess is that most Freepers are retired and receiving Social Security payments. Many Freepers are also disabled veterans who receive a monthly award payment. The COLA percentage increase for Social Security will apply to their VA checks as well.
Characterizing this as a Biden issue is improper. Sure he will try and claim credit for those that look at it as person-driven but this is all set up automatically.
I think seniors that have SS payments as a majority in their retirement income are getting hosed on inflation, I know I am. I would be angered if the established rules changed while I was a user. If the rules changed for users 15 years in the future,, on a gradual basis, so it could be planned for by those impacted, I would be less opposed.
That is hilarious, wish I had found that one. Dern it.
Me on both counts, and I'm still working..................for now.,.................
I read that as “Biden pampers”.
The real inflation rate is around 17% and they are complaining that they might give a 9% raise in SS next year. Probably will be much less then 9%.
This article is a joke.
I could get elected If I through around other peoples money…this kind of crap should be illegal. They’re buying votes with taxpayer money.
YES! Keep it coming...hail, Biden!
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.
“Biden panders...”?
So Joe personally determined what the yearly increase in Social Security will be”?
Good point. It’s a BS headline because Joe has nothing to do with determining the increase.
Medicare is going to increase more than whatever % increase SS goes up so people on SS will actually lose out.
Social Security COLA is calculated based on a formula set by law. Neither Biden or any other president could change it if they wanted to.
Pretty sure the COLA adjustment is legislative and formulaic. Biden doesn’t get to set it, it’s automatic and tied to the inflation rate.
This is a nonsense article
You are correct. the article is a joke.
Medicare is going to increase more than whatever % increase SS goes up so people on SS will actually lose out.
The Fed has been under reporting inflation for decades.
SS payments have been shrinking as a result and are a shadow of what they once were.
Anyone that thinks they can retire comfortably on Social Security is in for a rude awakening when they see their first check.
The biggest insult from SS in my opinion is that the Dems made SS income taxable under IRS rules.
Their idea of taxing the rich.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.