Have you noticed rising prices on a number of goods and services recently? If so, you’re not alone. In fact, the Consumer Price Index, which monitors inflation, is currently reflecting higher prices in a number of categories.
That’s the bad news. The good news is that, since a subsection of the Consumer Price Index is used to calculate cost of living adjustments for Social Security checks, beneficiaries might experience a relatively large increase in their checks next year.
It’s still too early to know for sure, but the Senior Citizens League, a non-partisan organization, has been monitoring the Consumer Price Index closely. According to recent data, the League estimates that Social Security checks could be bumped by as much as 5.3 percent next January.
That would be the highest cost of living adjustment we’ve seen since 2009, when the increase was set at 5.8 percent.
The increase would come as a welcome relief to retirees, who often depend upon cost of living adjustments to keep their budgets in line with rising prices. For example, the cost of gasoline has risen by 56.2 percent from May 2020 to May 2021. Food prices are up too; the cost of milk is up 7.2 percent, and the cost of citrus fruit rose by 9 percent, for example.
Of course, we always caution those planning for retirement to avoid counting on Social Security for too much of their income. The program was designed to serve as a supplement to other forms of income that you establish yourself, and is unlikely to provide for your entire lifestyle.
For more help with retirement planning, give us a call to schedule a consultation. In the meantime, we will keep you updated as the potential for a cost of living adjustment develops throughout the rest of this year.
