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.
Just saw this, which says Medicare Part A goes up, and
Medicare Part B goes neutral or down. Part D will
likely go up a little.
Not sure how the plans will break out yet.
Here:
I don’t understand why people on welfare get free medical but the ones on SS have to pay for it. It should be the other way around
More like 2-3-4%, if we don’t financially collapse, by then.
I take it that Xiden is claiming credit for something that is built in the Social Security legislation. Xiden didn’t wake up one day and decide to add 8% to social security checks.
Want to hear something that will boil your blood? My grandma is a Canadian citizen and will get getting social security.
Wage-Price Inflation Spiral, here we come - thanks Brandon.
She must have earned it.
“… may be as big as 9%.”
Won’t do much to offset my IRA losses.
I don’t understand what you are saying.
Do you think the inflation rate is 2-4%?
If so do you pay any bills?
Biden has little to do with the COLAs. They are written into law and determined by SSA, not Biden.
Bid DOES have much to do with inflation, which does cause the COLAs to increase, however.
These broad-brush accusations for political reasons get silly after a while.
Big, my ass!
Give congress a 3% raise and the stinking communist bastards would go ballistic...
Thanks for that. I jumped the gun and am probably wrong.
Medicare is going to increase more than whatever % increase SS goes up so people on SS will actually lose out.
The standard monthly premium for Medicare Part B enrollees will be $164.90 for 2023, a decrease of $5.20 from $170.10 in 2022.
source: 2023 Medicare Parts A & B Premiums and Deductibles 2023 Medicare Part D Income-Related Monthly Adjustment Amounts
She married an American man 20 years her senior and he died. So now she gets the survivor portion of his pension. I love her and all but that would piss me off if I was a US taxpayer.
Don't worry, we'll just print more money. Oh, inflation is transitory.
Thanks for the link. I’ll go over it.
Good point. Our system is totally out of wack.
Part of the drain on Soc Sec is caused by paying out to ‘refugees’ who never paid in a penny.
Paying out ‘Disabled’ to persons who do NOT have a physical disability-—They use drugs-—OR they GAMBLE & they get to COLLECT SSDI....
Those ‘lawyers’ who ‘specialize’ in such claims should be disbarred.
I saw one interview that the inflation rate is 18.4%.
https://clicks.aweber.com/y/ct/?l=Dq6yu&m=3Vv3QZC6J.6cBfA&b=nGf3XKMX.EdFqfnuRETauw
I said inflation rate was over 18%. Sorry, you are correct.
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