Social Security recipients may be in for a rude awakening
Alessandra Malito of MarketWatch explains how the cost of living adjustment (COLA) is calculated and notes retirees may be in for a rude awakening for 2021. The Coronavirus pandemic has led to a collapse in consumer prices, which coupled with low oil prices, means there is practically no inflation. While steady prices are good in one sense, they will limit the increase in monthly benefits Social Security recipients receive, and the increase could even be zero, as has been the case several times in the past decade. However, the third quarter (June 1 – Sep 30) is used to calculate COLAs, so there is still time, and spot shortages are actually now causing price increases. Most retirees also received one-time $1,200 stimulus payments, a boon for those whose incomes did not decline due to the pandemic. Read Malito’s full article here.