2022 COLA Watch: The Good News, and the Bad News

If you’ve been paying attention to the financial markets over the past few weeks, you’ve no doubt heard quite a few references to the dreaded “i word” – inflation. The consumer price index (CPI) number for April registered a whopping 0.8% (quick mental math will cause you to annualize that to close to 10%), and with all the rhetoric about rising oil, food, and building products, it’s anyone’s guess at this point what the future will bring. The CPI reports, of course, could led to a substantial jump in Social Security benefits, depending on how the third quarter indexes this year compare to the third quarter of last year, and this could likely lead to a total eclipse of the 1.3% 2021 Social Security COLA. That’s the good news,

On the other hand, the corollary to rising CPI and its upward effect on COLA is that indeed, prices are rising, and that’s the bad news. It’s no secret that the CPI (CPI-W, actually) used to determine Social Security COLA is generally ineffective in measuring the price increases that most significantly affect seniors. The weighting is such that the category of medical costs, for example, does not really reflect the proportionate costs faced by seniors. Our post last Monday provided a good look at this issue, and today we refer to posts by The Motley Fool’s Dan Caplinger on www.koamnewsnow and Yahoo!Finance’s Josephine Nesbit presenting additional perspectives the COLA matter.

So, stay tuned for additional forecasts as they become available, but be aware that the official 2022 Social Security COLA will not be announced until after the third quarter CPI numbers are known.

Notice: The links provided above connect readers to the full content of the posted koam and Yahoo!finance articles. The URLs (internet addresses) for these links are valid on the posted date; socialsecurityreport.org cannot guarantee the duration of the links’ validity. Also, the opinions expressed in these postings are the viewpoints of the original source and are not explicitly endorsed by AMAC, Inc.; the AMAC Foundation, Inc.; or socialsecurityreport.org.

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