A Viewpoint on the Adequacy of Social Security COLAs
As we’ve pointed out several times in the past few weeks and months, media projections of a major, inflation-induced bump in Social Security benefits have created the impression that beneficiaries will see an increase of more than 10% come January. This may or may not be realistic (we’re betting on not), but no matter what the COLA ends up at when announced in October, it’s clear to most people (and especially to those retirees dependent on Social Security benefits) that the current rate of inflation is likely to outstrip COLA’s ability to maintain purchasing power.
In a post on nonpareilonline.com, The Motley Fool’s Stefon Walters focuses on the issue of inflation and its impact on Social Security recipients, pointing out that despite the potential for a historically high COLA, many people will lose ground in their ability to cope with rising prices. He cites the pre-retirement earnings “rule of thumb” typically used to assess how much you’ll need to maintain a lifestyle in later years, using this measurement to compare Social Security benefits’ adequacy for average earners. In his post, Walters includes thoughts on steps future retirees might take to guard against financial shortfalls in their retirement plans.
Read his post here…