Big COLA Increase Next Year?
Pundits seem to be tripping over themselves, breathlessly acclaiming that the Social Security Cost of Living Adjustment (COLA) for 2022 will be the highest in over 10 years. No question that’s great news for those who depend on Social Security, but it’s important to keep things in perspective. The reason 2022 COLA will be big is because inflation soared in 2021. Anyone who shops for food, fills their car’s gas tank, eats out, or buys just about anything else can tell you that prices have risen sharply. Higher prices translate to an bigger year-to-year change in the Consumer Price Index, from which COLA is determined, thus COLA rises along with prices. This Forbes article by contributor David Rae explains all of that, but also notes a probable future issue: if inflation subsides in subsequent years, COLA increases may not even happen for a year or two because COLA is dependent upon an annual increase in the consumer price index (CPI) from one year to the next. So a higher CPI this year will be compared to a lower CPI next year, resulting in no COLA increase for 2023, or only a very small one. Click here to read more.
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