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An Interesting Twist on COLA

The hysterical projections of a 2023 cost-of-living adjustment (COLA) north of 10% have died out in the face of more realistic news from the Bureau of Labor Statistics. Consequently, seniors who were anticipating a larger bump are now anticipating an adjustment in the mid 8% range, perhaps as high as 8.7% according to some pundits. But despite the lower-than-expected increase, there may actually be an upside, according to The Motley Fool’s Trevor Jennewine. His post on The Motley Fool website suggests that, since the gap between how COLA is calculated and the actual inflation rate is a measurement of purchasing power lost, it might be better in the long run if that gap were narrowed. He sums it up with this paragraph: “…seniors are actually better off with lower inflation (and smaller COLAs), simply because COLAs are failing to completely offset the impact of rising prices anyway. So periods of lower inflation (and smaller COLAs) should actually do a better job of preserving the buying power of benefits than massive COLAs in response to high inflation. With that in mind, seniors can view the falling COLA forecasts as good news.”

An interesting perspective. Check out his post here

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