COLA 2021 Watch: Way up, but not totally good news - Bloomberg

The Senior Citizens League reports that the 2021 COLA percentage for Social Security beneficiaries looks like it’s trending to an above 6% increase at this point. While that’s a welcome boost for cash-strapped seniors–who have realized an average annual adjustment of a mere 1.7% during the past decade–some quarters are sounding the alarm that the driver of the potential boost is inflation. After all, the basic math that produces the COLA result is, in reality, nothing more than a measure of how prices are moving…that’s not good news for any consumer, and especially not seniors.

Bloomberg reporter Katia Dmitrieva, in a post on their website, pegs the potential total benefit increase at about $60 billion next year if the 6.1% estimate holds. That’s a fairly large spending increase, especially within a program already facing solvency issues in the not too distant future. As Ms. Dmitrieva notes in her post, “The annual social-security adjustment is made to ensure payments to seniors keep up with the cost of living.” She goes on to quote Aneta Markowska, chief economist at Jefferies, that the additional disposable income going to seniors “sustains inflationary pressure on the margins,” likely adding to an across-the-board upward spiral in prices.

In her post, Ms. Dmitrieva points out that the COLA calculation process doesn’t create an officlal projection until after the third-quarter CPI-W numbers are in, so fluctuations can be expected. Read her Bloomberg post here…

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