The media report that Social Security payments will rise over 9% next year. The source of the figure is the Senior Citizens League. It specifically puts the figure at 9.6%, which is just above the CPI (consumer price index) rate of inflation for the past several months.
In its new CPI – COLA Update report, the Senior Citizens League commented that a cost of living adjustment “would increase the average retiree benefit of $1,656 by $159.00.” The organization admitted that two more months of data will be required until an official figure gets announced.
The amount Social Security recipients get paid has become essential to the financial lives of millions of Americans. Over 50 million people receive these benefits. In recent years when inflation has run low, payment increases have been extremely modest.
The increase may affect the overall U.S. economy. Millions of Americans have no income beyond the benefits. In many of these cases, people already struggle to make essential payments, which include those for food, transportation and rent. When the costs eat up the total benefit, these beneficiaries cease to contribute much to the huge U.S. consumer economy that relies substantially on discretionary income.
The increase may shorten the period when full Social Security payments are available. The current estimate is that Social Security will run out of money in 2034. This may change what Americans who are 50 years old or younger get paid when they enter the period when they can take Social Security payments. While several solutions to this problem have been put forward, none have been adopted. These include increasing the Social Security tax, cutting Social Security payments and increasing the age at which Social Security payments are available.
While the CPI’s increase slowed in July, the pace continues near levels not posted in several decades. The cost increases of some products and services run well into the double-digit percentages, which raise these cost of living figures. A 9.6% increase in Social Security payments may not be enough to keep pace with the things older Americans have to buy for daily living.
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